A healthy dose of skepticism can be a good thing, except when it’s unfounded — and then it can end up costing you, especially when it comes to insurance. Ready to get educated? We bust five common insurance myths about life insurance, auto insurance, business coverage and homeowners insurance.
Myth #1: I’m too young to need life insurance.
There are many reasons people think they don’t need life insurance. Sometimes it’s the expense, or that they have coverage through work. But the most common reason people believe they don’t need life insurance is age. Young and healthy? That’s great! It’s also the perfect time to get life insurance because you benefit from lower rates, ensuring you have the coverage you need for the long haul. For example, a 20-year term policy for a healthy 30-year-old may cost in the neighborhood of $250 a year.
Myth #2: Auto insurance costs more if I drive a red car.
This is an urban legend that just won’t die. For so long, people have believed that red cars were indicative of a more aggressive driving personality. The truth is, your insurance company isn’t so interested in your personality. The type of car is what matters, not the color. Factors such as make, model and engine size are what help determine your premium. So if red happens to be your color, don’t let worries of high insurance premiums stop you.
Myth #3: Auto insurance won’t cover me if I cause an accident.
This common insurance myth stems from a lack of understanding about the general types of auto insurance. Auto policies can be combined in many different ways to provide a unique fit for your driving needs. These three types of car insurance are just a few of your options:
- Liability Insurance. Required by law in most states, liability car insurance helps you pay for damage resulting from an accident you were responsible for. The bodily coverage aspect of liability insurance covers some of the injuries inflicted on the other party. The property coverage piece of liability insurance typically covers damage inflicted on the other car involved.
- Collision Insurance. This covers damage that you, the driver, caused to your own car in an accident. Collisions typically don’t cover non-driving related incidents like theft, flooding, vandalism and so on.
- Comprehensive Insurance. This helps cover costs that collision insurance doesn’t. Comprehensive insurance can be useful if a car is stolen, ruined in a fire or damaged by an animal.
Some car insurance plans offer wide-ranging add-ons, including rental cars, personal injury protection, flood damage and theft. Other auto insurance policies may only cover damages you inflicted on the other party involved. If you aren’t sure about the details of your policy, ask your Farm Bureau agent to walk you through the fine print so you can learn the facts about your insurance coverage.
Myth #4: Homeowners insurance always protects my valuables.
If you have homeowners insurance, don’t assume that your heirloom jewelry carries the same protection as your couch. Limitations may apply, especially to high-value items. Things that you consider part of your home may not actually be covered, such as a detached property, jewelry or collectibles. Even circumstances like mold or a backed-up sewer might not be covered. Your Farm Bureau agent will be able to discuss the details of what’s covered — and what’s not — under your homeowners policy.
Myth #5: I work from home, so I don’t need business coverage, just a homeowners policy.
Not so fast. Your typical homeowners policy will protect you if your home is damaged, but it won’t cover your home-based business completely. What if someone is injured on your property? What if you use your car for your business? What if you’re traveling for work? If you have a home-based business, you’ll need to look into small business insurance to ensure you’re adequately covered.