8 Common Insurance Myths Homeowners and Drivers Should Know

Insurance is one of the most important financial tools available to protect your home, your car, and your family — yet it's also one of the most misunderstood. Misconceptions about how coverage works can leave policyholders exposed when they need help most. Here are eight of the most common insurance myths, debunked.

Myth 1: Red cars cost more to insure.. The color of your vehicle has absolutely no effect on your insurance premium. Insurers look at the make, model, year, safety features, and your driving history — not the paint job.

Myth 2: My home insurance covers flood damage.. Standard homeowners policies do not cover flooding from external water sources. You need a separate flood insurance policy through the National Flood Insurance Program (NFIP) or a private carrier. If you live in a flood-prone area of Massachusetts, this coverage is essential.

Myth 3: Minimum coverage is enough for my car.. Massachusetts requires minimum auto liability coverage, but minimum limits can be exhausted quickly in a serious accident. If you cause an accident and your liability limits are exceeded, you're personally responsible for the difference.

Myth 4: My renters insurance covers my roommate.. Unless your roommate is explicitly listed on your policy, their belongings are not covered. Each renter should carry their own renters insurance policy.

Myth 5: Filing a small claim won't affect my rates.. Insurers track claims history. Multiple small claims can flag you as a higher risk and lead to premium increases at renewal — or even non-renewal. Consider paying for minor repairs out of pocket to protect your claims-free discount.

Myth 6: My home insurance covers my home-based business.. Standard homeowners policies specifically exclude business activity. If clients visit your home or you keep business inventory on-site, you need a business owner's policy or a home business endorsement.

Myth 7: Older cars don't need comprehensive or collision coverage.. This depends on the car's value relative to the premiums and your deductible. For some older vehicles, it makes financial sense to drop these coverages — but run the numbers first with your agent.

Myth 8: All insurance companies are the same.. Rates, coverage options, customer service quality, and claims handling vary enormously from one carrier to another. Working with an independent agent like AMD Insurance Group means we shop multiple carriers to find the best value for your specific situation.

Have questions about your current coverage? Contact AMD Insurance Group in Needham for a free policy review.