Any confusion over what to buy or how to use a product can end up being costly, but when
it comes to insurance, misunderstandings can end up costing thousands of dollars.
We set out to find the worst sources of confusion, based on 10 common insurance myths. Insure.com asked 2,000 adults whether 10 statements were true or false. All the statements were false. We also looked at who believes each myth more - women or men.
In all cases except one, men were more likely to be duped by an insurance myth.
Myth 1: I should buy insurance coverage for my house based on its real estate market value.
• 52% think it's true (45% women, 55% men).
• Tip: Buy coverage based on the costs to reconstruct the home. Imagine your home being leveled by fire or a tornado - this is a worst-case scenario that you want to insure for.
Myth 2: Red cars cost more to insure because they get pulled over for speeding more.
• 46% think it's true (52% women, 48% men).
• Tip: Car color doesn't affect insurance rates and insurance companies don't use it in their calculation of rates.
Myth 3: If I cause a crash with extensive damage to others, my auto insurance company can cancel me immediately.
• 44% think it's true (50% women, 50% men).
• Tip: Most states have laws that prohibit insurers from canceling you mid-term due to a claim.
Myth 4: Small cars are the cheapest to insure.
• 40% think it's true (42% women, 58% men).
• Tip: Small and mid-size SUVs and minivans are the cheapest to insure. Small cars do not have the cheapest rates because they are often chosen by younger, inexperienced drivers who submit more claims. Also, injury claims are higher from small cars.
Myth 5: The Affordable Care Act (also called Obamacare) allows health insurance companies to base rates on medical conditions such as high blood pressure, heart disease and cancer.
• 36% think it's true (42% women, 58% men).
• Tip: The Affordable Care Act prohibits health insurance companies from basing rates on pre-existing conditions. Nor can health insurers charge different amounts for men and women.
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