Insurance Myths:
1. Myth: Red cars cost more to insure.
Truth: The color of your car does not affect the price you pay. Your auto insurance rates are determined by a variety of factors, including make and model of your vehicle, where you live, how far you drive, and your driving history, but color is not one of them.
2. Myth: Insurance covers a rental car if your vehicle is damaged in an accident.
Truth: It depends on your auto insurance coverage. If your current plan includes comprehensive and collision coverage, paying extra for rental car insurance would be redundant. In other cases, however, you may want to spring for the additional coverage. If you’re only covered under a commercial car insurance plan or you don’t want to risk paying a high deductible, additional rental car insurance could be a good idea. Talk to your insurance agent to find out what’s best for you!
3. Myth: If your car is totaled, you’re no longer responsible for your car loan payments.
Truth: Your legal obligation to repay the loan still applies, no matter what state your vehicle is in. There is a coverage type called loan/lease gap coverage, which pays off the balance of your car loan if your vehicle is totaled and you owe more than what it’s worth. Again, ask your agent for details.
4. Myth: If you rent, your landlord’s insurance protects your belongings.
Truth: Landlord insurance typically does not cover tenant’s belongings. If you rent, you should purchase your own renter’s insurance policy to cover your furniture, clothing, electronics and more. Some landlords require their tenants to show proof of renters insurance before approving a rental contract.
5. Myth: Homeowner’s insurance only needs to cover your home’s market value.
Truth: Market value is the price you paid for your home; replacement cost, however, is the number most insurance companies will use. Replacement cost is the price it would take to rebuild your home in the same spot, at the same size and with the same quality of instruction, at today’s costs. This is usually much more than market value, so you’d be doing yourself a disservice to not be insured at this amount.
6. Myth: Your homeowner’s policy covers any natural disaster.
Truth: Home insurance exists to protect your home, yes, but it has restrictions and exclusions. Wind damage (like that from tornados) should be included in your homeowners protection, but certain natural disasters (floods and earthquakes, in particular) aren’t included in traditional coverage. Consider purchasing a separate flood policy through the National Flood Insurance Program, as extensive rain can accompany tornadoes. If you happen to live near a fault line, you can also purchase an earthquake endorsement.
7. Myth: When your belongings are destroyed, you get brand new replacement items.
Truth: Similar to market value vs. replacement value for your home, there is a difference between actual cash value and replacement cost value for belongings for which you’d like to file a claim. For example, if a storm destroys your TV, you’d need to have replacement cost coverage to be able to buy a new one. Otherwise, actual cash value will cover what the television was worth –used– on the day it was destroyed. With depreciation, this could be far beneath what you’d actually need to replace the item.
8. Myth: When you “schedule” items (like jewelry), you’ll always receive the stated value.
Truth: Not always. Scheduled personal property is an add-on to traditional homeowners insurance policies that provides coverage for a greater number of risks. Scheduled property items often include heirloom jewelry, furs, antiques and art, collections, firearms, musical instruments and high-price cameras. If a scheduled item with a stated value of $10,000 is lost or stolen, you may only receive the current replacement cost value. The stated value is more like a limit rather than a guarantee.
9. Myth: If your neighbor’s tree falls on your house or in your yard, your neighbor pays.
Truth: In most cases, no. Your insurance will pay for any damage, minus the deductible. If the tree was diseased or damaged, and you can prove that you’d warned the neighbor, the neighbor could be responsible for the damage. This is another topic to discuss with your trusted insurance agent.
10. Myth: You aren’t legally responsible for a trespasser on your property.
Truth: You’re likely aware that you can be held responsible for injuries your guests sustain on your property. You can also be responsible for injuries sustained by uninvited guests on your property. Particularly if you have a trampoline, pool or other attractive item on your property that isn’t protected properly, you could be liable in the case of an incident. To best protect yourself, make sure your insurance carrier knows about all of these items on your property
*BONUS MYTH: You don’t need an insurance agent.
Truth: You don’t have to have one, but you’d be far better off if you do! An independent insurance agent can provide guidance for you to buy the best insurance coverage for your specific needs — from homeowners coverage to automobile, renter’s, life and more. Reach out to a local independent agent you can trust at https://insurancelaporte.com/contact/ !
