insurance myths
There are a variety of myths and misinterpretations about insurance. To help you separate fact from fiction, we compiled a list of insurance myths that we’ve heard frequently and provided brief explanations to help set the record straight. Call a trusted associate today if you have any concerns because of these myths.
Also, if you’ve heard any other potential ones, contact us so we can share them here. If you think these myths are interesting consider emailing them to a friend by clicking on the "email page" link above.
Myth #1: Flood insurance is only important if you live in a high-risk area.
Not true. 20-25% of flood claims come from outside high-risk areas. Think back to the recent spring flooding in 2006 and 2007. Remember, homeowner’s policies don’t cover flood situations.
Myth #2: Umbrella Insurance isn’t important for everyone.
You don’t have to be wealthy to be sued. Lawsuits are common, making umbrella insurance even more important. It gives you added liability protection above and beyond the limits on personal homeowners, auto, and watercraft insurance policies. For a relatively minimal amount, you can add an additional $1 to $5 million in protection.
Myth #3: Renter’s Insurance isn’t necessary if your stuff isn’t worth a lot.
Do you care about being sued? Renter’s insurance does more than just protect your personal property, which adds up fast if you should lose everything in a disaster. It also provides personal liability protection if someone gets hurt in your home. We live in a litigious society…be protected.
Myth #4: My car is old, so I don't need to have high insurance limits.
When you have an older vehicle, it can make sense to remove comprehensive and collision coverage if you can afford the risk and cost of having to replace the vehicle on your own. However, the age of a car has no impact on the damage or injury that can happen in an accident. You still need to have good limits to protect your liability exposure.
Myth #5: If someone driving my car causes an accident, I won't be held responsible.
While the “points” for being at fault in an accident affect the driver’s rating, the insurance policy covering a vehicle is considered primary. So, if someone else is driving your car, your insurance company would have to pay damages in an accident.
Myth #6: Only the “Breadwinner” in the home needs Life Insurance.
Think about the value contributed by a “non-working” spouse…childcare, housekeeping, food preparation, home accountant, school transportation and more. It’s often more than a full time job. You should buy life insurance if the absence of a person’s income or contribution would cause a financial hardship.
Myth #7: If I become disabled Social Security will take care of me.
Don't count on Social Security to take care of all your needs if you become disabled. You need other plans, too. We insure our cars, homes, etc., but often don’t think about disability insurance as protection if we are unable to work and earn an income.
Myth #8: I drive a company car, so I don’t need my own Auto Insurance.
Even if your employer has liability coverage, it may not be enough. You could be sued personally in a bad accident. Being listed on a personal auto policy doesn’t protect you unless you have a specific endorsement because “business use” is different. Also, if you borrow or rent a car, you’ll want your own protection. There are solutions to protect you…make sure you have one.
Myth #9: All Car Insurance Is the Same.
When comparing policies, you can’t look at price and not consider the level of protection. Any agent can reduce your coverage limits to reduce your premium, but you end up at risk. Smart ways to save are:
- Increasing your deductible
- Get all possible discounts.
- Talk to your agent periodically because changes in life can change your needs.
Myth #10: I have Health Insurance, so I don’t need medical coverage on my Car Insurance.
Some health insurance plans limit coverage, so your medical coverage gives you added protection. It will also cover passengers in your car, regardless of who caused an accident.
Myth #11: My Health Insurance will pay for my long-term care needs.
Health insurance doesn’t cover custodial care. Your options are:
- Increasing your deductible
- Rely on family to help
- Get Long-Term Care Insurance
In MA, Medicaid provides assistance to approximately 70% of all nursing home residents, but it requires using most of your savings first.
Myth #12: I only drive my car occasionally, so I don’t need higher limits.
The possibility of an accident is the same whether you drive a car every day or once a year. And, your liability is still the same liability if you’re in an accident and found responsible for injury or damage to other people or property. If you’re looking to reduce expenses, there are other options that won’t put you at risk financially.
Myth #13: Calling Murphy Insurance is the best way to get an Insurance Certificate.
Actually, it’s not. Online at our website, www.dfmurphy.com, is the easiest way.
- Click on “Forms Center”
- Under “Business Insurance, click “Certificate Request Form”
- Fill out the form
- We’ll email, fax or mail it.
Myth #14: I’m self-employed and don’t have employees. Worker’s Comp Coverage isn’t available.
Worker’s Compensation insurance laws have changed. In the past, you couldn’t get coverage if you didn’t have employees, but that’s no longer the case. You can protect yourself from on the job injuries with Worker’s Comp.
Myth #15: I’m self-employed and don’t have employees. I don’t need Workers’ Comp Coverage.
You’re your own “employee”, and you can get hurt, too. How will you support yourself if you get hurt on the job and can’t work? Workers’ Compensation coverage is important even if you’re a one man operation. Make sure you take care of yourself and those who depend on you.
Myth #16: Commercial Auto Policies cover equipment and tools left in a vehicle.
Only equipment permanently attached to the vehicle is covered. Loose tools and equipment are not such as pick-up truck tool boxes and contents because they aren’t permanently attached. To protect tools, supplies and equipment while in transit you need to add specific coverage.
Myth #17: If I’m not at fault in an accident, the other person will pay.
This assumes he has coverage. He could have no or low limits auto insurance. If so, you could have to suffer a long legal process at your expense to recover costs and damages. To protect yourself, it’s best to have higher limits on your own policy in case of an uninsured or under insured driver.
Myth #18: I use my car for my delivery job. I’m not self-employed, so I’m still covered.
If your vehicle is used for anything but personal use, then you will probably need to extend your personal auto policy to cover business use of your vehicle. Be sure you understand what is and what isn’t covered by your policy. The best way to find out is to review your policy and call us with questions.
Myth #19: All insurance providers are the same. It doesn’t matter who you buy your insurance from.
This misconception could cost you money, service and protection. Buying insurance isn't like buying milk or eggs. There are 3 different sources for insurance, and your choice of provider makes a difference.
- Independent Insurance Agents – Represent a number of insurance companies and research with these firms to find you the best combination of price, coverage and service. Some agents represent more insurance companies than others. Be sure to ask.
- Captive Agents – Only represent one insurance company that’s why their called “captive”. They can only sell you insurance policies offered by the one firm they represent.
- Direct Writers – Only represent their own company and insurance policies. Generally, insurance is only offered over the telephone or online, eliminating the possibility of meeting face-to-face.
Beyond options, it’s also wise to consider the ongoing support you’ll receive as your needs change and should you need to make a claim.