By: Danielle Shearer
When protecting your home and vehicle, understanding what your insurance covers can help you plan with confidence. Many insurance misconceptions are repeated as fact. Here, we clarify common questions about home and auto insurance so you can make informed coverage decisions.
Auto Insurance: Myths and Facts
Myth 1: The color of your car determines your insurance premium.
Fact: Whether your vehicle is bright red or plain white, color is not typically used to calculate your premium. Insurers consider factors such as the vehicle’s make, model, age, safety record, repair costs, theft risk and value, along with driver-related factors such as driving history, location, annual mileage and, where permitted, a credit-based insurance score.
Myth 2: Auto insurance always costs less as you get older.
Fact: Auto insurance premiums often decrease as young drivers gain experience and maintain a safe driving record, but they do not necessarily continue falling throughout life. Rates may level off and can begin increasing again for older drivers because age is one of several factors insurers may consider.
Driving history, claims experience, annual mileage, location, vehicle type, state rules and carrier guidelines also affect the price.
Potential age-related savings may include:
- A mature-driver discount for completing an approved defensive-driving or accident-prevention course.
- A low-mileage discount for retirees or others who no longer commute regularly.
- Carrier-specific discounts for drivers age 55 or older.
Myth 3: Your credit has no effect on your auto insurance premium.
Fact: In states where permitted, insurers may use a credit-based insurance score as one of several underwriting or rating factors. This differs from a traditional lending credit score, and state rules vary. Driving history, claims experience, vehicle characteristics and other factors may also affect your premium.
Myth 4: Every auto policy covers theft, vandalism, hail, fire and flood damage.
Fact: These losses are generally handled by comprehensive coverage, sometimes called “other than collision,” subject to the policy’s terms and deductible. Collision coverage addresses damage from an impact with another vehicle or object. Neither coverage is automatically included in every policy, so review your selections carefully.
Myth 5: The state-required minimum liability limits are enough for everyone.
Fact: Legal minimums may not be enough to cover the injuries, property damage or legal expenses resulting from a serious accident. If a loss exceeds your policy limits, you could be responsible for the difference. Your agent can help you evaluate higher liability limits and consider adding an umbrella policy to help protect your assets.
Myth 6: If someone else drives your car, their policy will always pay first.
Fact: The answer depends on the policy language, the driver’s status, the reason for using the vehicle and applicable state law. Coverage priority can vary by carrier, and specific conditions may apply. Confirm which policy is primary by reviewing both policies with an insurance professional before regularly allowing someone else to drive your vehicle.
Myth 7: Personal auto insurance automatically covers business use.
Fact: A personal auto policy may limit or exclude certain business uses, especially when a vehicle is used for deliveries, transporting people for a fee or by employees. If you use a vehicle for work, discuss the details with your agent to determine whether a business-use endorsement or commercial auto policy is appropriate.
Myth 8: A dealership can make insurance changes on your behalf.
Fact: Do not assume the dealership has added your new vehicle to your policy. The named insured or another authorized person should contact the agency or carrier promptly, provide the vehicle information and obtain updated proof of insurance and policy documents. Temporary automatic coverage may exist under some policies, but its scope and timing vary.
Home Insurance: Myths and Facts
Myth 1: Homeowners insurance covers every type of water damage.
Fact: Standard homeowners policies generally do not cover flooding from rising surface water. Flood coverage typically requires a separate policy. Other water losses, such as sudden damage from a burst pipe, may be covered, while damage caused by repeated seepage, poor maintenance or unresolved leaks may not be. The source of the water and the policy language matter.
Myth 2: Your home should be insured for its market value.
Fact: The amount needed to rebuild your home is not the same as its purchase price or current real estate value. Reconstruction costs reflect labor, materials, debris removal, building codes and other expenses. Review your dwelling limit regularly, especially after renovations or major changes in local construction costs.
Myth 3: Homeowners insurance covers routine wear and tear.
Fact: Home insurance is designed for covered, unexpected losses — not ongoing maintenance. Aging roofs, deteriorating systems, pests, mold or damage that develops over time may be excluded or limited. Regular inspections and prompt repairs are important parts of protecting your property and maintaining your insurability.
Myth 4: All personal belongings are fully covered automatically.
Fact: Personal property coverage is subject to limits, deductibles and policy terms. Special limits often apply to items such as jewelry, fine art, collectibles, firearms, cash and certain electronics. Creating a home inventory and discussing valuable items with your agent can help determine whether scheduled coverage or an endorsement is needed.
Myth 5: A home-based business is fully protected by a homeowners policy.
Fact: Homeowners policies often provide limited coverage for business equipment, inventory, customer property or business liability. Depending on your operations, an endorsement, an in-home business policy or commercial coverage may provide more complete protection.
Myth 6: Your policy automatically pays the full cost to replace damaged belongings.
Fact: The settlement depends on whether your policy provides replacement cost or actual cash value coverage. Replacement cost generally pays the cost to replace covered property with a comparable new item, subject to policy terms and limits. Actual cash value generally accounts for depreciation. Review your declarations and endorsements so you understand how a loss would be settled.
Myth 7: If your mortgage is paid off, you no longer need homeowners insurance.
Fact: Without a lender, insurance may no longer be contractually required, but your home and belongings are still major financial assets. Homeowners coverage can help protect against covered property losses, liability claims and additional living expenses when a covered loss makes the home temporarily uninhabitable.
At Howard Hanna Insurance, We Put You First
Insurance works best when it is tailored to your circumstances. Coverage, limits, deductibles, discounts and eligibility can vary by policy, carrier and state.
At Howard Hanna Insurance, our knowledgeable agents can help you separate myth from fact, review your current protection and build home and auto coverage around your needs.
Ready to review your coverage? Contact Howard Hanna Insurance today for a personalized home and auto insurance review or quote. We’ll help you understand your options so you can protect what matters most with confidence.
Coverage, limits, exclusions, deductibles, discounts and eligibility vary by policy, carrier and state. This article is for general informational purposes and does not modify any insurance policy. Please review your policy documents and consult your insurance professional for guidance specific to your needs.
About Howard Hanna
Howard Hanna Real Estate Services proudly provides real estate, mortgage, title, and insurance services across 18 states. As the largest family-owned and -operated real estate brokerage in the United States, Howard Hanna operates more than 500 offices with 15,000 sales associates and staff. The company’s proprietary Hanna Success System helps its agents achieve 53% more business than agents at the top 1000 brokerages nationally. Learn more at www.HowardHanna.com.
Last modified: October 27, 2026