Why Insurance Myths Are More Than Just Misconceptions
Auto insurance is one of the most significant recurring expenses of car ownership, and yet most drivers learn what they know about it from word of mouth, half-remembered conversations, or assumptions that have never been tested. That's a problem, because acting on bad information can leave you underinsured, overpaying, or blindsided when a claim gets denied.
The myths in this article aren't fringe beliefs — they're ideas that come up constantly in real conversations between drivers. Clearing them up won't tell you exactly what policy to buy, but it will help you ask better questions and avoid decisions you might later regret. For a breakdown of coverage types and what they actually pay for, see our car insurance coverage guide.
Myth
Red cars cost more to insure because insurers charge higher rates for them.
Fact
Insurers don't factor in vehicle color when calculating your premium — it simply isn't part of the rating formula.
This one has been circulating for decades, and it's completely false. Auto insurers base rates on factors like your driving record, age, location, vehicle make and model, engine size, safety ratings, and claims history. Color is not in that equation. When you apply for coverage, you're typically not even asked what color your car is. The myth likely persists because red sports cars are associated with fast driving — but it's the vehicle type and driver profile that influence rates, not the paint.
Myth
State minimum liability coverage is enough to protect you financially after an accident.
Fact
Minimum coverage meets the legal requirement but often falls well short of what a serious accident actually costs.
Every state sets a floor for liability coverage, but those minimums were established with baseline scenarios in mind — not multi-vehicle crashes, serious injuries, or property damage to expensive vehicles. If your liability limits are $25,000 per person and a passenger in the other car incurs $80,000 in medical bills, you're personally on the hook for the difference. Minimum coverage keeps you legal; it doesn't necessarily keep you protected. It's worth reviewing your limits against what you could actually afford to pay out of pocket in a worst-case scenario.
Myth
Your personal auto insurance covers you while driving for a rideshare or delivery app.
Fact
Standard personal policies typically exclude commercial or for-hire use — a gap that can leave you without coverage during a trip.
Personal auto policies are written for personal use. The moment you're driving with the rideshare app open or making a delivery for pay, most standard policies treat that as a commercial activity and may deny a claim. Rideshare companies like Uber and Lyft do carry some coverage, but it varies depending on whether you have a passenger, are waiting for a match, or are between rides. If you drive for any app-based platform, talk to your insurer about a rideshare endorsement or a commercial policy that closes the gap.
Myth
Filing a claim is always the right move — that's what insurance is for.
Fact
Small claims can trigger premium increases that cost more over time than simply paying for the damage yourself.
Insurance is designed for losses you genuinely can't absorb on your own — not every scratch and dent. Many insurers track your claims history and may raise your rates after even a minor claim, sometimes for three to five years. If the repair cost is close to your deductible, filing often makes little financial sense. Before you call your insurer, it's worth getting a repair estimate and comparing it against what a potential rate increase might cost you over the long run. That math doesn't always favor filing.
Myth
Comprehensive coverage means your car is covered for everything.
Fact
Comprehensive covers specific non-collision events — it does not cover collision damage or every possible scenario.
The name is misleading. Comprehensive coverage pays for damage caused by events outside a collision: theft, vandalism, falling objects, fire, flooding, and animal strikes are common examples. It does not cover damage from hitting another vehicle or object — that's what collision coverage is for. Many drivers carry one without the other and are surprised when a claim falls outside what their policy covers. Understanding where each type of coverage begins and ends prevents that surprise. Our guide to comprehensive vs. collision explains the distinction in plain terms.
Myth
Your credit score has nothing to do with your car insurance rates.
Fact
In most U.S. states, insurers use a credit-based insurance score as one factor in determining your premium.
This surprises many drivers, but it's standard practice in most states. Insurers use a version of your credit information — not your exact credit score, but a related metric — as a predictor of claim likelihood. Drivers with lower credit-based scores often pay higher premiums, while those with stronger credit profiles may pay less. A handful of states prohibit or restrict this practice, but for most drivers, managing credit responsibly can have a downstream effect on insurance costs. It's one more reason financial habits matter beyond just borrowing.
What These Myths Actually Cost You
Most of these misconceptions aren't just harmless misunderstandings — they translate directly into money lost or risk taken on. Drivers who assume minimum coverage is enough may face out-of-pocket costs in the tens of thousands after a serious accident. Drivers who file every small claim may watch their premiums climb steadily without realizing why.
1 in 8
U.S. drivers estimated to be uninsured
According to the Insurance Research Council, roughly one in eight drivers on U.S. roads carries no insurance at all — underscoring why underinsured motorist coverage matters.
$24,000+
Average liability claim for bodily injury
The Insurance Information Institute has reported that the average bodily injury liability claim runs well into the tens of thousands, often exceeding what state minimums cover.
The pattern here is consistent: a wrong assumption, unchallenged for years, quietly shapes decisions that cost real money. The same thing happens with other financial products — credit score myths follow a nearly identical pattern where widely repeated "tips" turn out to be flat wrong. Auto insurance isn't any different. Check your actual policy, ask your insurer specific questions, and don't rely on what someone told you in a parking lot.
For a deeper look at how two commonly confused coverages actually work, our piece on comprehensive vs. collision insurance walks through when each one pays out and why the difference matters.
