With all the information—and misinformation—circulating about insurance and the insurance industry, it’s almost impossible for the average person to know all there is about which policies are the best, those you should or should not buy, and more.
Thankfully, there are insurance experts that can help you fill in the gaps, but nobody wants to have to go into the insurance-buying process totally blind. What’s worse? You may think that you know a good deal of information about insurance, but if you’ve been exposed to any of the misinformation that is out there, you could be missing crucial bits of knowledge that can make the buying process that much easier for you. If you’re looking to test your insurance knowledge and dispel any rumors about what is covered, what policies you need to buy, and more, read on to learn about some of the common insurance myths that are out there and how they actually apply to the industry.
Myth #1: Renters Insurance is Only for Wealthy People
If you’ve ever rented before, you’ve likely had the option to buy renters insurance. Although renters insurance is designed to protect those who lease their residences, many people will opt out of purchasing a policy. Why is that? This decision largely boils down to a misunderstanding of what renters insurance truly covers in the event of a disaster. Many renters assume that their landlord’s insurance will cover any damages that occur in this case, but that is only a half truth. Your landlord’s insurance will likely cover some damages, but they will be limited to structural and property damages, not necessarily those pertaining to a tenant’s belongings. This can lead many renters to assume that if they are not wealthy, their belongings are not worth insuring. However, in the event that items in the residence need to be replaced after a disaster does occur, the total can add up quicker than the renter may have expected.
Renters insurance not only covers the belongings that are within the residence, but it also covers the renter in the event that someone is injured within their residence. This additional liability coverage allows the renter a greater sense of safety and security knowing that they will not have to pay for these costs out of pocket.
Myth #2: You Only Need Flood Insurance if you Live in a High-Risk Area
Although this one may seemingly make sense, it is actually untrue. Around 20-25% of flood claims are from areas that are not considered to be high risk. When compared with other disasters, such as a home fire, flooding is around 4 times more likely to impact your home. If you have a home insurance policy, you should be in the clear, right? Unfortunately, most home insurance policies do not cover the home or any of the belongings in it in the event of a flood. Purchasing flood insurance may keep an inconvenient situation like this from turning into a disastrous one.
Myth #3: Umbrella Insurance Isn’t for Everyone
There is a common misconception that umbrella insurance is only for the wealthy. Maybe this idea was born of the thought that wealthy people are always getting sued for any number of reasons, but that’s not necessarily true. Anyone can be sued, and it is more likely to prove disastrous for an average earner to be sued than a wealthy person. Purchasing umbrella insurance is a smart way to make sure that you are protected in the event that a lawsuit ever does come your way.
Myth #4: Only the “Breadwinner” Needs a Life Insurance Policy
This idea is probably due to the outdated thought that a “non-working” spouse truly does not work. Today, however, we know that most “non-working” spouses are just working in a different capacity, often being responsible for things such as meal preparation, stocking the home, transportation for children, home accounting, and much more. A good rule of thumb when evaluating whether to buy life insurance is to examine if a financial hardship would be encountered due to the loss of a partner and their helping capabilities. Although the tasks of a “non-working” spouse do not always pay out monetarily, the loss of them would likely cause a financial hardship to befall the spouse or the family.
Myth #5: If You Drive a Company Car, You Don’t Need Auto Insurance
This myth may hold a sliver of truth, but it’s only halfway correct. A company car is likely insured in the event of an accident; however, the driver of the car may not be. This means that if you are in an accident, the policy will likely cover only the damage to the car, but you may be left on the hook to pay for any personal injuries or damages.
Myth #6: If I’m Not at Fault for the Accident, Their Insurance Will Pay
It’s an understandable thought, but it’s not always a correct one. This myth assumes that all drivers are insured all the time. In the face of financial hardships brought on by the Coronavirus pandemic, there are rising rates of uninsured drivers on the roads, even with the legal enforcement of required auto insurance. Make sure that you’re protected from encountering a situation like this by adding coverage that protects against uninsured or underinsured drivers.
Myth #7: My Health Insurance Will Pay if I Have Long-Term Care Needs
Unfortunately, long-term care falls outside of the parameters of most health insurance plans. If you do not purchase long-term care insurance, your options for paying for it are slim, and the costs can rack up quickly. By purchasing a long-term care insurance plan, you can avoid paying out of pocket or relying on relatives to financially supplement your care.
Myth #8: All Auto Insurance is the Same
All car insurance is not built the same, and there are many factors to consider when choosing between different policies. Lowering your premium may sound great, but if it also means lowering your protection, you might want to give it a second thought. To save on your policy without putting yourself at extra risk, consider raising your deductible or reevaluating your policy with your agent as your coverage needs change throughout your life.
Myth #9: People Without Spouses or Children Don’t Need Life Insurance
When most people think of dependents, they think of children; however, this is not always the case. Elderly parents can be considered dependents, and if you are their primary caretaker, life insurance can help keep them comfortable in the event of a tragedy. Additionally, the funds that life insurance provides can be used to cover any outstanding debts or funeral expenses, so you don’t end up passing them along to anyone else.
Myth #10: All Insurance Providers are the Same
Insurance policies differ across the board, and all insurance providers are certainly not built the same. Many insurance agencies differ by size, region, and quality of service. Sometimes, shopping for the right insurance policy can take a couple of different tries to get right. Regardless of where you shop, you should be sure to choose an insurance agency that you feel comfortable with and a policy that helps keep you safe.
Inter-Agency Insurance in Knoxville, Tennessee
When you’re looking for coverage that offers the right protection for your needs, look for Inter-Agency Insurance. At Inter-Agency, we work with you and our large, trusted network of carriers to find the policy that fits your needs just right. From personal to commercial insurance plans, and all of your other risk management needs, Inter-Agency can provide you with the coverage that you’re looking for. Our experienced, professional agents and staff believe that the best way to build great relationships with our customers is by always providing quality service that you can trust.