Free Insurance Myth or Fact quiz with instant feedback. Think you can tell insurance myths from facts? This quick true-or-false quiz busts the most common misconceptions about auto, home, health, and life insurance that cost people real money. This quiz covers 20 questions ranging from beginner to advanced.
This is one of the most persistent auto insurance myths out there. Many people are absolutely convinced that driving a red car will cost them more in insurance premiums. The belief is so widespread that some car buyers actually avoid red vehicles specifically because they fear higher insurance costs. But insurance companies have access to detailed vehicle data and use very specific factors to set rates.
Correct — car color has zero impact on insurance premiums.
Most people assume insurance premiums are based solely on driving record, age, and vehicle type. The idea that your credit score could influence your car insurance rate sounds unfair to many consumers. But the insurance industry has spent decades analyzing data and found strong correlations between certain financial behaviors and claim likelihood. This connection has been controversial but is widely used.
Correct — credit-based insurance scores are used in most states.
The word comprehensive means complete and all-encompassing in everyday language, so it is completely reasonable to assume that comprehensive auto insurance covers everything. This is one of the most common and costly misunderstandings in auto insurance. Many drivers purchase comprehensive coverage believing they are fully protected against any possible damage or loss, only to discover gaps when they file a claim.
Correct — despite the name, comprehensive only covers specific non-collision events.
Many homeowners assume their standard homeowners insurance policy protects them against all types of water damage, including flooding. After all, they pay premiums every month and expect their home to be covered when disaster strikes. But there is a critical distinction between water damage from internal sources like burst pipes and water damage from external flooding that catches many homeowners completely off guard.
Correct — homeowners insurance specifically excludes flood damage.
It seems logical that if you pay for insurance, you should use it whenever you have damage. That is what it is there for, right? But insurance is not like a subscription service where using it more gives you more value. The insurance industry tracks your claim history carefully, and filing claims — even legitimate ones — can have consequences that cost you more in the long run.
Correct — filing small claims can increase your premiums more than the payout.
It might seem unfair that something as personal as marital status could affect your car insurance rate. What does being married have to do with driving safely? But insurance companies do not make pricing decisions based on opinions or assumptions. They analyze massive datasets spanning millions of policies and decades of claims data to identify factors that correlate with claim frequency and severity.
Correct — married drivers statistically have lower accident rates.
It is true that age is one of the most significant factors in life insurance pricing. In general, premiums increase as you get older because the risk of death increases with age. This leads many people to assume that a 50-year-old will always pay more than a 30-year-old for the same coverage. But life insurance underwriting considers many factors beyond just your birthday.
Correct — health conditions can outweigh age in life insurance pricing.
Many renters assume they are covered under their landlord's insurance policy. After all, they live in the building and the landlord has insurance on it. It seems reasonable to expect some protection would extend to the people living inside. This assumption leads millions of renters to go without insurance, leaving them completely exposed to losses from theft, fire, water damage, and liability claims.
Correct — a landlord's policy only covers the building structure.
When a friend slips on your icy walkway or a neighbor's child gets hurt in your backyard, you might assume their own health insurance will handle the medical bills. This assumption can be dangerously wrong. Property owners have a legal duty to maintain safe conditions, and failing to do so can make you financially responsible for injuries that occur on your property — regardless of whether the injured person has their own insurance.
Correct — you can be liable for injuries on your property regardless of the visitor's insurance.
Before the Affordable Care Act was enacted, having a pre-existing condition like diabetes, asthma, or even pregnancy could make it nearly impossible to get health insurance on the individual market. Insurers routinely denied applications or charged dramatically higher premiums. Many people still worry that this could happen to them, not realizing how fundamentally the ACA changed the health insurance landscape.
Correct — the ACA prohibits insurers from denying coverage or charging more for pre-existing conditions.