Insurance Myths

Myth #1: Flood Insurance is only essential if you live in a high-risk area.

Not true! 20-25% of flood claims come from outside high-risk areas. You are four times more likely to sustain a loss from a flood than a fire. Remember, homeowners policies don’t cover flood situations.

Myth #2: Umbrella Insurance isn’t important for everyone.

You don’t have to be wealthy to be sued. Lawsuits are common, making umbrella insurance a critical tool to protect your life. It gives you added liability coverage above and beyond the limits of personal home, auto, and watercraft insurance policies. You can add $1 to $5 million in protection for a relatively minimal amount.

Myth #3: Renters Insurance isn’t necessary if your stuff isn’t worth much.

Do you care about being sued? Renter insurance does more than protect personal property. It covers personal liability if someone gets hurt at your home. Lawsuits are common, so be protected. Also, the replacement value of personal property adds up quickly if you should lose everything in a disaster.

Myth #4: My car is old, so I don’t need to have high insurance limits.

The age of a car has no impact on your potential liability if you’re in an accident, so you need to have reasonable liability limits. Removing “comprehensive” and “collision” coverage can make sense, but only if you can afford the risk and cost of replacing the vehicle independently.

Myth #5: If someone driving my car causes an accident, I won’t be held responsible.

While the “points” for being at fault in an accident affect the driver’s rating, the insurance policy covering a vehicle is considered primary. So, if someone else is driving your car, your insurance company would have to pay for damages in an accident.

Myth #6: Only the “Breadwinner” in the home needs Life Insurance.

Consider the value a “non-working” spouse contributes, including childcare, housekeeping, food preparation, home accountant, school transportation, and more. It’s often more than a full-time job. You should buy life insurance if the absence of a person’s income or contribution would cause financial hardship.

Myth #7: If I become disabled, Social Security will take care of me.

Don’t count on Social Security to take care of all your needs if you become disabled. You also need other plans to reduce impacts on your lifestyle. We insure our cars, homes, etc., but often don’t think about disability insurance as protection if we are unable to work and earn an income.

Myth #8: I drive a company car, so I don’t need my own Auto Insurance.

The car may be covered, but you may not. Even if your employer has coverage that provides some liability protection, it may not be enough, or you could be sued personally in a bad accident. Also, if you borrow or rent a car, you should have your own protection. Being listed on another auto policy isn’t enough to protect you because business use differs. You need to purchase special protection.

Myth #9: All car insurance is the same.

When comparing policies, you can’t look at the price and not consider the level of protection. Any provider can reduce your coverage limits to reduce your premium, but you end up at risk. Smart ways to save are:

• Increasing your Deductible
• Taking Advantage of All Possible Discounts
• Talking to Your Agent Periodically – life changes can change your needs.

Myth #10: I have Health Insurance, so I don’t need medical coverage for my Car Insurance.

Some health insurance plans limit coverage or have high deductibles, so having medical coverage gives you added protection. It will also cover passengers in your car, regardless of who causes an accident.

Myth #11: My Health Insurance will cover my long-term care needs.

Health insurance doesn’t cover custodial care. Medicaid assists approximately 70% of all nursing home residents in Massachusetts, but it requires using most of your savings first. Your options are:

• Use Personal Savings
• Rely on Family to Help
• Get Long-Term Care Insurance

Myth #12: I only drive my car occasionally, so I don’t need higher limits.

The possibility of an accident is the same whether you drive a car every day or once a year.  Your liability for an injury you cause or property you damage isn’t diminished because you don’t drive often. Make sure you always have reasonable protection limits. If you’re looking to reduce expenses, consider increasing your deductible.

Myth #13: The only way to request a Certificate of Insurance is to speak with a Murphy Insurance team member.

It’s not. We have several ways to request a certificate 24 hours a day, and you don’t have to speak with anyone: online using our Certificate of Insurance request form, sending us an email, or calling our Certificate Hotline.

Myth #14: I’m self-employed and don’t have employees. Workers’ Comp Coverage isn’t available.

Workers’ Compensation insurance laws have changed. Previously, you couldn’t get coverage if you didn’t have employees, but that’s no longer the case. You can protect yourself from on-the-job injuries with Workers’ Comp.

Myth #15: I’m self-employed and don’t have employees. I don’t need Workers’ Comp Coverage.

You’re your own “employee,” and you can get hurt, too. How will you support yourself if you get hurt on the job and can’t work? Workers’ Compensation coverage is important even if you’re a one-person operation. Make sure you take care of yourself and those who depend on you.

Myth #16: Commercial Auto policies cover equipment and tools left in a vehicle.

Only equipment permanently attached to the vehicle is covered. Loose tools and equipment, such as pick-up truck toolboxes and contents, are not covered because they aren’t permanently attached. To protect tools, supplies, and equipment while in transit, you need to add specific coverage.

Myth #17: If another driver causes an accident and I’m hurt, his Auto Insurance pays for my injuries.

This assumes he has coverage. Some people have no insurance or only minimal insurance that won’t cover the damage they cause to others. Even if you sue them, you may be unable to recover damages. The best way to protect yourself is to have good limits on your policy for the specific parts that cover being hit by an “uninsured” or “underinsured” driver.

Myth #18: I use my car for on-the-job duties. Because I’m not self-employed, my Auto Insurance policy covers me.

If your vehicle is used for anything but personal use, then you may need to extend your auto policy to cover business use of your vehicle. Be sure you understand what is and isn’t covered by your policy. The best way to find out is to review your policy and call us with questions.

Myth #19: All insurance providers are the same. It doesn’t matter who you buy your insurance from.

This misconception could cost you money, service, and protection. Buying insurance isn’t like buying milk or eggs. There are three different sources for insurance, and your choice of provider makes a difference.

1. Independent Insurance Agents – Represent several insurance companies and research with these firms to find you the best combination of price, coverage, and service. Some agents represent more insurance companies than others.  Be sure to ask.
2. Captive Agents – Only represent one insurance company. That’s why they’re called “captive.” They can only sell you insurance policies offered by the one firm they represent.
3. Direct Writers – Only represent their own company and insurance policies. Generally, insurance is only offered over the telephone or online, eliminating the possibility of meeting face-to-face.

Beyond options, it’s also wise to consider the ongoing support you’ll receive as your needs change and should you need to make a claim.

Myth #20: I have Life Insurance through my employer, so my family is protected.

Not really. While employer-provided life insurance is a benefit, it often isn’t enough coverage to protect your loved ones. Also, if you leave your job, it’s not always affordable to take with you. The wise decision is to have your own policy. Once approved, you’ll have life insurance protection you can count on regardless of your job.

Myth #21: Insurance is required to drive a car, so if someone hits me, there is coverage.

Maybe! Many drivers have minimum protection or continue driving without coverage after canceling their policy. Because you can’t control what coverage others have, you should have your own by purchasing high limits on the underinsured and uninsured portion of your auto policy.

Myth #22: My employer provides me with Disability Insurance. I don’t need my own.

Your disability insurance through your employer could have a financial gap, which can be eliminated by having your own policy. Also, should you become unemployed, your own disability policy would remain in place, providing some disability protection while you are looking for a new job.

Myth #23: Insurance should be bought and used for every accident or disaster.

Insurance is designed and should be used to protect you in a catastrophic event that causes financial hardship. It makes sense if you can afford to pay for a minor loss out of pocket since claims often result in a premium increase. With this strategy, having the highest deductible you can afford makes sense, usually saving you money by reducing your premium.

Myth #24: My business partners and family can work things out if I become disabled.

Without planning, the disability or premature death of an owner often results in a business being dissolved. Usually, the remaining partners can’t afford to buy out the equity in the business, causing it to close. Planning can provide the cash needed to avoid such situations using disability and life insurance as a funding source.

Myth #25: My business doesn’t make much money or have many assets. I won’t be sued.

Lawsuits can happen to any business or person. Monetary judgments can be collected in many ways, including seizure of property and assets, garnishing future earnings, liquidating bank accounts, and more. Make sure you have coverage to protect your current and future earnings from potential liability.