10 Insurance Myths Debunked

Get the Facts about Insurance Coverage

Many people find insurance policies, coverage, and payouts confusing. So many insurance myths exist that it can be difficult to separate fact from fiction. Although your best source for answers is your New Jersey Trusted Choice independent insurance agent, this article should dispel some of the more common myths. Having the right facts about the insurance industry can help you get the coverage you need and avoid overpaying or not taking advantage of smart choices or special offers that will benefit you now and in the future.

Myth #1  My Car Color Affects My Insurance Premium

One of the most common auto insurance myths is that red cars cost more to insure. This is not true. While things like the brand and model of car, how old it is, and if it has any special safety features may affect your policy premiums, the paint job will have no bearing on your monthly bills. Go ahead and buy your favorite color. Just take the time to work with your Trusted Choice independent insurance agent to discuss other ways to save money, like good driver discounts.

Myth #2  My Neighbor’s Policy Will Cover All Damages if Their Tree Falls on My Car or House

This is not so much of a myth as it is a “maybe.” If your neighbor is cutting down a tree and does not make sufficient effort to keep it away from your property, the chance their policy will pay goes way up. However, if a bad storm passes through and a tree falls through no fault of your neighbor’s own, your own homeowner’s or auto insurance policy should cover things. [1] If that storm is a hurricane, things change once more.

There are so many different policy details that come into play when something from one property damages another. Auto insurance may cover damage to a vehicle from a falling tree, but it will not launch a full-scale investigation as to where exactly the heavy branch came from. Homeowners policies may cover structures or things like sheds and fences but will not help if an uninsured statue or pond fountain is damaged. Understand what your policy covers and ask your local independent insurance agent for clarification. This is the best way to stay protected.

Myth #3  Flood Insurance Also Covers Hurricane Damage

Not every homeowner carries flood insurance, but those who do must read their policies carefully. In the majority of cases, the types of water events covered do not include hurricanes and severe storms. It may be necessary to consider a separate hurricane insurance policy because your standard homeowners insurance is not likely to cover the damage.

New Jersey is a common spot for hurricanes to cause destruction, especially along the long stretch of shoreline and inland rivers. [2] Make sure you ask your Trusted Choice independent insurance agent about which policy would be right for your location, so you can understand the coverage differences between flood and hurricane policies.

Myth #4  My Landlord’s Homeowners Insurance Covers My Belongings

This is one insurance myth that can lead to great financial difficulties for renters. A landlord’s insurance policy covers the physical property itself: the buildings and built-in fixtures as well as the land around it in most cases. It does not include anything brought in by the tenant at all. In order to protect yourself and your belongings, you should get your own renters insurance policy. [3]

Myth #5  Only People with High Net Worth Should Have Umbrella Policies

Umbrella policies protect people from lawsuits associated with anything that happens with you, your family, your belongings, or your property. [4] For example, if someone slips on your icy front walk, they could sue for medical bill coverage. If your dog bites someone or their pet, you may face a suit for damages as well. You do not need to be wealthy to have things go wrong, and some people will not hesitate to file a lawsuit no matter how small your net worth. Umbrella policies protect you against these things, and they are a good idea overall. In fact, if you have less money on hand to pay for this type of compensation, you may need insurance to help more than anyone else.

Myth #6  Employer-Provided Life Insurance Is Enough

An untimely death always causes a lot of financial upheaval. When family or other loved ones are already struggling with grief, it helps to know they are protected from money issues. Life insurance covers everything from end-of-life medical care bills to funeral expenses to general living costs for a period of time. Even in the case of sudden and unexpected death, these things can add up quickly and have a long-term devastating financial effect on the people left behind.

Many employers offer life insurance, but not enough to truly make a difference. Most companies pay out one- or two-years’ worth of salary to the surviving beneficiaries. With the high costs of funerals and healthcare, that amount usually won’t last long. Give your family more comfort and time to recover with a private life insurance policy instead. Ultimately, it all comes down to how much protection you want to offer your loved ones and how many people will be left behind. These decisions are best made with the help of a qualified Trusted Choice independent agent who can recommend options from multiple providers. Contact your local New Jersey Trusted Choice independent agent for expert guidance and hand-picked options.

Myth #7  Self-Employed People with No Staff Do Not Need Workers’ Compensation Insurance

Only businesses with employees need to pay for workers' compensation insurance policies, right? This statement seems to make sense, but it all comes down to how the government defines an employee. A single freelancer who never outsources work or hires extra help does not need to worry. However, those who work as a contractor or subcontract to other companies may be responsible for workers’ comp under the terms of the signed contract. This covers extras not under your personal health insurance policy. Since the situations are so unique and specific, talk with your Trusted Choice independent agent for help with this interesting insurance topic.

Myth #8  My Premiums Will Go Up if I File a Claim

This is one of the auto insurance facts that many people believe no matter which insurance provider they choose. It makes sense to some degree. If you are a higher risk for the company and you make them pay out for injuries or repairs, they want to get their money back by raising your prices. However, this is actually a myth with another big ‘maybe’ stamp on it. In some cases, your premium will go up after a claim, but not always.

If you do your homework from the start and work with a knowledgeable Trusted Choice independent agent, you can sign on for a policy without this risk. Many companies offer driver forgiveness options that give you a reprieve for your first accident or incident. Also, if whatever happened was not your fault, the chance of raised premiums decreases even more.

Myth #9 – Homeowners Insurance Policies Cover a Home-based Business

When it comes to commercial insurance myths, none are more prevalent than those associated with home-based businesses. [5] Is the home office just another room in your house covered by the homeowners policy? What happens if you use your computer for both work and gaming? In the majority of cases, your homeowners insurance will not cover business expenses or equipment. Read the small print. You may find that the coverage levels are woefully inadequate for the amount of stuff you use to run your company.

Business insurance always makes sense although many people skimp on this important protection. Rather than take unnecessary financial risks, it may be sensible to add endorsements to your homeowners policy, get attached in-house business add-ons, or purchase general business owners policy (BOP) coverage. The right option for you depends on the size and scope of your business, and the belongings in your house that have to do with your business. By working with a Trusted Choice independent insurance agent, you get unbiased guidance about your insurance options, and they’ll search for policies from multiple insurance companies so you get the right business coverage for your situation.

Myth #10 – I Don’t Need an Independent Agent. I’ll Just Get My Insurance Online

One of the most prevalent myths about the insurance industry is about how easy it is to sign up and get the best deal online after a simple search. While the internet certainly makes things quick and convenient, it also makes it much more challenging for people without in-depth insurance knowledge to navigate these important purchases. Do you want to risk not getting the coverage you need or paying too much for limited options?

A Trusted Choice independent insurance agent is your best bet for avoiding these and other issues. [6] They are not simply salespeople attempting to convince you to buy the highest price policies. The caricature of fast-talking, hard-selling insurance agents is as much a myth as any other claim in this article—or perhaps they’ve been replaced by “easy” online insurance companies aimed at high-quantity sales rather than high-quality service. By contrast, a Trusted Choice independent insurance agent is a local professional who understands the market, knows how to research and present the options to you in an understandable fashion, and helps you to get the specific coverage that you need to be protected and financially comfortable.

When you know the difference between common insurance facts and myths, you are better equipped to make smart decisions about your coverage. Work with a New Jersey Trusted Choice independent agent to find the best policies for you.

Why Work with a New Jersey Independent Insurance Agent?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your ZIP Code? New Jersey independent insurance agents take the time to discuss exactly how much coverage is necessary for your individual needs.

Independent agents act as your own personal insurance shoppers, offering you more options than one-policy companies. With just one call, they’ll start gathering multiple quotes for you to review so you can be sure you get the right coverage at the right price.

And, because they’re your dedicated agent, they’re not just there at the beginning, they're there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to should an event occur.