A new year always brings new opportunities for growth and learning. It’s always interesting to discover that things we might have believed are actually incorrect. In the insurance field, we often find ourselves clearing up misinformation about types of insurance many people don’t think they need.
In the spirit of getting 2025 off to a great start, we thought it would be fun to reveal 5 insurance myths that should finally be put to rest forever. Happy learning in your new year!
Myth 1 – I Don’t Need Renters Insurance
Renters insurance is residential insurance coverage for individuals and families who don’t own their home. Whether you live in an apartment, rented house, or a room in someone else’s home, you need renters insurance to protect your property.
This myth persists for several reasons. The first is the assumption that the landlord has insurance coverage that protects the renter. The landlord’s insurance covers the building and their liability. It does not cover the personal property of any tenants.
Another reason people think they don’t need renters insurance is that they don’t believe their property has enough value to be worth the cost of covering. Let’s clear that up. Renters insurance is pretty inexpensive and can be quoted based on your actual property value. Some policies are as low as $200 per year for pretty good coverage. Now think about having to replace everything you own tomorrow. When you add up the cost of everything you would need, it’s pretty clear that your stuff absolutely does have value. Not only that, but renters insurance covers the cost of alternative living accommodations if you are fully displaced from your home.
Finally, your landlord might not be liable for injuries or property damage incurred by your guests. Renters insurance includes liability in case someone gets hurt or gets their stuff broken while they are at your rented home.
Myth 2 – I Don’t Need Uninsured/Under-insured Motorists Coverage
If auto insurance is a Pennsylvania requirement, then everyone involved in a car crash would be insured, right? Wrong. Even though car insurance is legally required, the minimums are extremely low and not everyone obeys the law.
If you get into a crash with a driver who either doesn’t have car insurance at all, or they have the bare minimum coverage, uninsured/under-insured motorist coverage gives you the protection they lack. More people than you might imagine have far too little coverage, by the way. Young drivers, people who buy their policies based on price alone at an online insurance company, people who are struggling financially, and people who drive older paid off vehicles all commonly carry low insurance limits.
Uninsured/under-insured motorist coverage prevents the bad circumstances of a crash from getting even worse when it comes time to pay for everything. This addition to your auto policy will kick in to help you when the other driver can’t.
Myth 3 – I Don’t Need Life Insurance
While you may not have to deal with the expenses of dying, someone in your inner circle certainly will. People believe that they don’t need life insurance for various reasons, but all those reasons are total myths.
If your employer provides a life insurance policy, this is a great benefit, but it shouldn’t be your sole coverage. If you are diagnosed with something terminal, you may have to leave your job. Only now, you won’t qualify for a standalone life insurance policy. Additionally, your employer could end this benefit, or you could change jobs and have a lapse in coverage.
Sometimes, the non-breadwinning member of a family assumes they don’t need life insurance because their spouse or partner earns enough income. This reasoning doesn’t account for the time off of work survivors need to grieve, make lifestyle changes, obtain childcare, or otherwise adjust to the loss. It also doesn’t account for end of life or posthumous expenses someone will have to pay. Life insurance provides a cushion for survivors to keep things afloat for a while.
In addition to covering current expenses, life insurance helps survivors plan for the future. When someone dies, they can’t contribute to retirement funds, education savings, or other long-term financial plans that were meant to provide for their family members. Life insurance may provide a lump sum to invest for these purposes.
Finally, individuals who feel that their personal wealth negates the need for life insurance may be forgetting about the impact taxes have on an estate. Once state and any relevant sales taxes are assessed, the heirs could take a big financial hit. Life insurance can ease that burden.
In fact, life insurance eases many burdens that survivors will carry after a loved one dies. Let’s put these myths about life insurance far behind us in 2025.
Myth 4 – I Don’t Need Insurance for My Fun Vehicles
Your auto policy doesn’t automatically cover every motorized vehicle you own. Anytime you buy something with wheels and an engine of any sort, give your insurance agent a call. We can dispel all the myths you may have been led to believe about ATVs, UTVs, E-bikes, lawn tractors, and other non-car vehicles.
A prevailing myth is that if it’s not a car, it doesn’t need to be insured. In fact, most states require off-road vehicles to be insured. The insurance you need will depend on how you use the vehicle, so be upfront with your insurance agent about these details. If you report that your four-wheeler is just for having fun in the woods, but you actually use it to get back and forth from the grocery store at your mountain house, you might not be properly covered in a crash.
E-bikes are typically treated like motorcycles for insurance, and lawn tractors might be covered under your homeowners policy if they are only used for lawn care. But is it true that you’re really only using your UTV for property maintenance? Again, be honest about how you use the vehicle so that your insurance agent can get you the correct policy.
The avoidance of insuring fun or extra vehicles is not always so much about the myth of assuming they are automatically covered under another policy or thinking they don’t need coverage. It’s usually more about not wanting the added expense of insuring such vehicles. The problem is that incidents with these vehicles are often disproportionately expensive. Insurance will reduce the overall impact of a crash or accident.
Myth 5 – I Don’t Need Umbrella Coverage
People like to assume that umbrella coverage is only for the ultra-wealthy. After all, who really has a need for $1 million or more in coverage? Well, once you consider your total net worth, including your retirement account, household worth, savings, vehicles, and more, you might be far wealthier than you realize.
Added to that is your need to defend yourself against an astronomically high claim. Don’t forget, you are insured to cover an incident that is your fault. If you are at fault in a crash with someone who has a luxury car, or who has the best lawyers in the state, you could be looking at claim amounts far beyond anything you’ve imagined. Lawsuits are not always cut and dry regarding monetary limits. Some people will sue for very high amounts because they are angry, opportunistic, or simply feeling justified. If you don’t have the money today to cover the damages you owe, the insurance company will keep an eye out and collect at a future time.
Umbrella insurance adds a layer of protection for totally outside the box incidents. It protects your overall net worth both today and in the future so that a single lawsuit won’t ruin you forever. Believe it or not, umbrella policies can be very affordable. It’s worth analyzing with your agent before making a final yes or no decision.
Protect What’s Important with Practical Insurance
Insurance is not some mythical concept that is beyond understanding for the average person. In reality, it is a very practical tool for protecting yourself, your family, and the things you own. Insurance comes in all types and price ranges, as well. It’s not reserved for a financial benchmark, but rather covers people at every phase of life.
If this article busted any insurance myths you believed, or if you’re now wondering what else you might be misinformed about when it comes to insurance, reach out to us. Smyrl Insurance educates, nurtures, and empowers people through insurance so that they know what they need and understand how it works. We will review your current policies, or help you get set up with new policies to cover your specific needs for 2025. We serve clients for renters, life, auto, umbrella, and many other types of insurance in Hatfield, Lansdale, Souderton, Harleysville, and throughout the region in Montgomery County and Bucks County, Pennsylvania.
