Myth 6: Your Home's Market Value Determines How Much Dwelling Coverage You Need

Fact: Dwelling coverage is generally based on the estimated cost to rebuild the structure, not simply its market value.

A home's market price can include the value of the land and other factors that aren't the same as reconstruction costs.

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Construction prices can also change over time.

If you renovate or make significant improvements, ask your insurer whether your dwelling coverage should be updated.

Myth 7: Renters Don't Need Insurance Because the Landlord Has Insurance

Fact: A landlord's policy generally protects the landlord's property and interests, not the tenant's personal belongings.

Renters insurance can provide coverage for eligible personal property and may also include liability and additional living expense coverage, depending on the policy.

Your landlord's insurance generally does not mean your belongings are automatically insured.

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Myth 8: Everything Inside Your Home Is Automatically Covered at Full Value

Fact: Personal-property coverage has limits, exclusions, deductibles, and valuation rules.

Certain valuable items may have special sublimits under a policy.

Examples can include:

• Jewelry
• Watches
• Collectibles
• Certain electronics
• Art
• Specialized equipment

You may need an endorsement or separate coverage for certain high-value possessions.

Create a home inventory and discuss valuable items with your insurer.

Myth 9: Auto Insurance Covers Every Damage to Your Vehicle

Fact: Different types of auto coverage protect against different risks.

For example:

Liability coverage generally addresses your legal responsibility for covered injuries or property damage to others.

Collision coverage generally addresses covered damage to your vehicle resulting from a collision.

Comprehensive coverage generally addresses certain covered non-collision events, such as theft or specified types of damage.

The exact protection depends on your policy.

Myth 10: If You Have Health Insurance, You Pay Nothing for Medical Care

Fact: Health insurance does not necessarily mean all medical expenses are paid by the insurer.

Depending on your plan, you may have:

• Premiums
• Deductibles
• Copayments
• Coinsurance
• Out-of-pocket maximums
• Network restrictions
• Non-covered services

Review your plan carefully so you understand your potential financial responsibility.

Myth 11: Insurance Covers Wear and Tear

Fact: Insurance is generally designed to cover specified risks, not routine deterioration or maintenance.

For example, homeowners insurance generally isn't intended to pay for ordinary aging, deterioration, or routine maintenance.

Insurance is designed to protect against covered events specified in the policy.

This is why regular maintenance remains an important part of protecting your property.

Myth 12: You Should Never File a Small Insurance Claim

Fact: Whether to file a claim depends on the circumstances.

Some people avoid filing claims automatically because they worry about premium increases.

However, there is no universal rule that every small loss should be paid out of pocket or that every loss should be submitted.

Consider:

• Size of the loss
• Deductible
• Policy requirements
• Potential claim impact
• Your financial ability to pay

Most importantly, understand your policy's notification requirements before deciding not to report a loss.

Myth 13: Insurance Companies Automatically Pay Every Valid-Looking Claim

Fact: Claims are evaluated according to the policy's terms.

An insurer generally reviews factors such as:

• Whether the event is covered
• Whether an exclusion applies
• Policy limits
• Deductible
• Documentation
• Policy conditions
• Circumstances surrounding the loss

A claim can be denied or limited if the loss falls outside the policy's coverage.

This is why understanding your policy before a loss occurs is so important.

Myth 14: You Don't Need to Update Your Insurance Until Renewal

Fact: Major life changes can require an earlier policy review.

Don't wait for renewal if something significant changes.

Review your insurance after:

• Buying a home
• Moving
• Remodeling
• Buying a vehicle
• Selling a vehicle
• Getting married
• Having children
• Starting a business
• Purchasing expensive property
• Acquiring significant assets

Your insurance should reflect your current situation rather than your circumstances from several years ago.

Myth 15: Staying With the Same Insurance Company Is Always Cheaper

Fact: Loyalty does not guarantee the lowest available premium.

Insurance prices can change over time.

It may be worthwhile to compare quotes periodically while making sure the coverage is genuinely comparable.

When comparing policies, examine:

Premium + deductible + coverage limits + exclusions + benefits

A lower quote is only useful if it provides appropriate protection.

Myth 16: Insurance Discounts Are Automatically Applied

Fact: You may need to ask about available discounts.

Depending on the insurer and policy, discounts may be available for things such as:

• Bundling policies
• Safety features
• Security systems
• Safe driving
• Claims-free history
• Certain payment arrangements
• Eligible safety courses

Discount eligibility varies, so ask your insurer to review your policy for available discounts.

Myth 17: Your Insurance Agent Automatically Knows Everything About Your Situation

Fact: You need to communicate changes in your circumstances.

Your insurance professional can help you evaluate coverage, but they may not know that you:

• Renovated your home
• Purchased expensive property
• Started a business
• Added a new driver
• Bought another vehicle
• Changed how property is used

Keep your insurer informed about significant changes.

Myth 18: You Can Wait Until a Disaster Happens to Understand Your Coverage

Fact: The time to understand your insurance is before you need it.

After a loss is usually the worst time to discover that:

• Your deductible is too high
• A particular risk is excluded
• Your coverage limit is inadequate
• A valuable item has a special sublimit
• You need separate insurance for a particular risk

Review your policy while everything is still normal.