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Being an educated consumer is especially important when it comes to insurance. Misunderstandings about your policy and coverage can end up costing you a lot of money. Insure.com compiled this list of the 10 most common insurance myths and misconceptions about auto, homeowners and health insurance. This information will help you when you are assessing your new or existing insurance coverage needs.

Myth #1: I should base the coverage amount I buy on my home's real estate market value.

Fact: You should buy insurance coverage based on reconstruction cost. Imagine your home was completely destroyed, this would be the amount you should buy coverage for. The cost to rebuild can be drastically different from the real estate market value. In fact, if your home is located in a weak housing market, it could cost more to rebuild your home than what you could sell it for. Also, you don't need to include the value of your land in the rebuild amount you calculate for coverage. If you aren't sure the reconstruction cost of your home, be sure to contact one of our Keenan Insurance agents and we'll help you calculate the amount of coverage you will need.

Myth #2: It costs more to insurance a red car.

Fact: Whether your car is red, purple, green or blue, it doesn't matter. Color doesn't get entered into the equation when insurance companies are calculating rates. What does matter is your driving record, so if you get pulled over for speeding in that sporty red convertible, that could definitely affect your auto insurance rate.

Myth #3: If I am at fault for a major crash with major damage to others, my auto insurance policy will be cancelled immediately.

Fact: In most states, laws are in place that prohibit mid-term policy termination because of a claim. Normally, if your insurance company wants to drop you, they will have to wait until your policy expiration date is approaching and send you a notice of non-renewal. Of course, you can be cancelled at any time for non-payment.

Myth #4: It's the cheapest to insure small/compact cars.

Fact: It's actually small and mid-sized SUV's and minivans that cost the least amount to insure. Young inexperienced drivers (who submit more claims) usually drive smaller cars. Plus, there are a larger number of injury claims for smaller cars because they don't offer the same amount of protection as larger vehicles .

Myth #5: Obamacare (The Affordable Care Act) permits health insurance companies to calculate rates based on pre-existing conditions.

Fact. Basing rates on pre-existing conditions (such as cancer, high blood pressure, etc.) is prohibited by the Affordable Care Act.

Myth #6: Everything is covered by Comprehensive auto insurance

Fact. Maybe "comprehensive" wasn't the best name, because it does not cover everything. Comprehensive coverage pays for specific issues like storm damage, theft, vandalism and animal collisions (which is especially handy for Bucks County drivers trying to avoid all of the deer out there).

Myth #7: New cars are a thieves victim of choice.

Fact. Thieves are often after the parts, not the car itself. Older cars parts have a higher market value, therefore making them more desirable for theft.

Myth #8: My friend borrowed my car and crashed it. Their insurance pays, right?

Fact. I'm afraid not. Whoever drives your car is covered by your insurance. If a claim is made while they are behind the wheel, it can affect your rates now and into the future. Think twice before you hand your keys over to a friend.

Myth #9: I am required by Obamacare (The Affordable Care Act) to take the health insurance plan my employer offers.

Obamacare mandates that most Americans purchase a health plan, but it doesn't mandate where you get it.

Myth #10: I got an out-of-state speeding ticket, but as long as I pay it, it won't effect me.

Fact: Sorry. Even if you get an out-of-state speeding ticket, it can follow you and adversely affect your auto insurance rates. Be sure to drive carefully and obey the speed limit not matter where you are.

Please feel free to contact any of us at Keenan Insurance if you have any questions about new insurance coverage options, or if you would like to review your current coverage.

Posted 5:50 PM

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NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
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