There are a great number of myths, most of which are false, about insurance. This post will attempt to shed some light on some of these insurance myths.
Myth: Color determines the price of auto insurance.
This is not true. The color of a car does not determine or play any role in the cost of insuring it. However, the type of car does affect the cost of insurance. Because of this, there may be some correlation between color and cost. However, it is important to remember that correlation does not imply causation. A more likely cause is that there is correlation between the color red and higher insurance costs because cars that are red are more likely to be more expensive.
Myth: Home insurance coverage should be based on the real estate market value of the home.
This myth is also false. Home insurance coverage should be based on the cost to reconstruct the home including materials and labor, unless you are willing to gamble on the financial loss/gain with insuring it at its real estate market value.
Myth: I only need to buy minimum liability auto insurance.
This myth that is relatively widespead can really hurt you financially. A huge number of accidents will not be fully covered by minimum liability auto insurance, leaving you on the hook for the rest. Because of this, it is important to have insurance that will leave you financially sound if you are ever in a serious accident.