Top 6 Most Common Myths about Insurance Debunked

 

Myth 1: I should buy insurance coverage for my house based on its real estate market value.

Fact: You should buy home insurance based on the amount you would need to cover the cost of reconstructing your damaged home. While a policy based on market value is the least expensive to purchase, this policy may not cover the full expense of rebuilding since in some states, this is more than the market value of the home.

Myth 2: If I’m single without dependents, I don’t need life insurance coverage.

Fact: In spite of not having dependents, many singles still have bills and other expenses. In 2014, the average cost of a funeral was $7,181 which may be a financial hardship on the family in the event of death.

Myth 3: If I cause a crash with extensive damages to others my auto insurance company can cancel me immediately.

Fact: It is unlikely that your insurance carrier will cancel your policy for getting into an accident. When a company cancels a policy it is usually due to other reasons such as non-payment, filing a false claim or non-compliance with the terms of the policy. However, it may be possible that your insurer will non-renew you at the end of your current policy period.

Myth 4: My comprehensive auto insurance covers everything and anything.

Fact: While comprehensive coverage typically covers damages not related to an accident, the term “comprehensive” can be misleading since comprehensive coverage does not actually cover everything. It is best to check with your insurance agent for a clarification on what your policy will cover before purchasing.

Myth 5: If my friend borrows my car and crashes it, their insurance will pay for the damage.

Fact: Because your name is legally associated with your car, your insurance will likely be responsible for paying for any damage if your friend was at fault. Typically, your friend’s insurance would be considered only in the event of a major accident if the cost of the claim reaches the limit of your policy.

Myth 6: Out of state speeding tickets can’t follow you home.

Fact: Unfortunately, what happens in another state does not usually stay there when it comes to traffic violations. Most stateshave interstate reciprocal agreements that require them to share information on moving violations. Many also record any out-of-state violation on your driving record and assign points to your license. Any violation, no matter how minor that appears on your DMV record will be seen by your car insurance company which may increase your insurance premium.