The Biggest Insurance Myths You Need to Know About

Insurance Myths Can you distinguish between the truth and the myth when it comes to insurance?

Despite the wealth of information people have on their fingertips, there are still a number of myths and misconceptions surrounding insurance. As a result, a lot of people find the topic confusing, to say the least. This can have serious implications since any misunderstanding about the topic can cost you thousands of dollars. To prevent this from happening, you should learn the truth about some of the most popular insurance myths that has been going around for ages. Here are some of them.

Top Insurance Myths

  • Your insurance coverage for your house should be based on its real estate value. According to the results of Insurance.com’s survey, 52% of the people they surveyed believed this to be true. To be on the safe side, you should buy insurance coverage based on the cost you need to rebuild it if it happens to be leveled out by a tornado or a fire.
  • It costs more to insure a red car. 46% of the survey participants believe this myth since apparently, red cars are more likely to get pulled over for speeding. Well, there is absolutely no truth in this. The color of your car has nothing to do with car insurance rates.
  • Your auto insurance will be canceled immediately if caused damage to others during a crash. Both men and women believed this to be true. However, this is yet another misconception. There are laws prohibiting insurers from canceling you mid-term as a result of a claim. They have to wait until your policy period is up before they can send you a notice of nonrenewal.
  • The Affordable Care Act allows health care companies to base their rates on pre-existing conditions. Again, there is not a grain of truth in this belief. The Affordable Care Act explicitly prohibits health insurance companies from basing rates on medical conditions such as high blood pressure, heart disease and cancer.
  • You don’t need renter’s insurance if you don’t own a lot of expensive items. If you will only take stock of all the items that you own, you will be surprised at how much you could in the event of a fire, theft and/or other natural disaster. Having a renter’s insurance can compensate for your losses and can help you get back on your feet in no time.
  • Only the primary breadwinner in the family needs life insurance. You should consider insuring every member of the household if their absence would cause a financial hardship for the family. Some people may think that a non-working spouse should not buy coverage since he or she does not contribute to the family income. However, when you factor in the amount of work your non-working spouse do, it can easily be equivalent to a fulltime job.