Are You Really Protected? Test Your Insurance IQ

A recent insurance survey of 2,000 adults, conducted by Insure.com, uncovered some widespread misconceptions about home, car (notably red cars), and health insurance.

For instance, more than half of the participants mistakenly believed a house should be insured for its market value, when in fact, it should be insured based on current rebuilding costs.

Ultimately, depending on their location, if homeowners are insuring according to market value, they may be considerably under-insuring or over-insuring their dwellings.

The survey also examined who was more likely to accept a myth – men or women. In all but one instance, men were more likely to be fooled by an insurance myth.

Here are the myths (all statements are false), the realities and gender breakdown of those who thought the myths are true.

Myth 1: I should buy insurance coverage for my house based on its real estate market value.
• 52% think it’s true (45% women, 55% men).
Reality: Buy coverage based on a home’s rebuilding costs (materials and labor).

Myth 2: Red cars cost more to insure because they get pulled over for speeding more.
• 46% think it’s true (52% women, 48% men).
Reality: Car color has no effect on insurance rates.

Myth 3: If I cause a crash with extensive damages to others, my auto insurance company can cancel me immediately.
• 44% think it’s true (50% women, 50% men).
Reality: Usually an insurance carrier has to wait until the policy period is up to drop a customer.

Myth 4: Small cars are the cheapest to insure.
• 40% think it’s true (42% women, 58% men).
Reality: Generally, the cheapest vehicles to insure are small and mid-size SUVs and minivans. Insurance for small cars runs higher, due to their popularity with inexperienced drivers who tend to file claims, and because passengers sustain more extensive (and expensive) injury claims.

Myth 5: The Affordable Care Act (also called Obamacare) allows health insurance companies to base rates on medical conditions such as high blood pressure, heart disease and cancer.
• 36% think it’s true (42% women, 58% men).
Reality: It’s just the opposite – rates based on pre-existing conditions are expressly prohibited by the Affordable Care Act.

Myth 6: Comprehensive auto insurance covers everything and anything.
• 32% think it’s true (41% women, 59% men).
Reality: Comprehensive coverage only protects your car against damage not resulting from a collision, including car theft, storm damage, animal collisions and vandalism.

Myth 7: Thieves prefer to steal new cars.
• 29% think it’s true (42% women, 58% men).
Reality: It’s more profitable to steal old cars and sell them for parts.

Myth 8: If my friend borrows my car and crashes it, their insurance will pay for damage.
• 25% think it’s true (48% women, 52% men).
Reality: When someone else drives your car, you and your insurance are liable for damages.

Myth 9: The Affordable Care Act (also called Obamacare) requires me to take the health insurance plan offered by my employer.
• 19% think it’s true (41% women, 59% men).
Reality: Although the Affordable Care Act requires almost all Americans to buy health insurance, they are not limited as to where they must obtain it.

Myth 10: Out-of-state speeding tickets can’t follow you home.
• 13% think it’s true (34% women, 66% men).
Reality: Out-of-state citations will appear on your record – count on it.
When you’re done checking your answers, check to see that you’re getting the best rate on your car insurance with a free car insurance quote today.
Are there are other insurance myths you know about? Feel free to share your thoughts in the comments section below