Common insurance myths debunked

Whenever I have insurance questions I call up my buddy Todd Curry of Curry Agency, Inc. He always has good answers for my odd questions. On this particular call I wanted help separating myth from reality. We all throw around insurance knowledge like we know what we are talking about, but do we really have any idea what we are talking about? Turns out, we don't.

Let's do this.

Myth or truth?If your friend is driving your car and they wreck it, their insurance will cover the damage.

MYTH. When you lend your car to a friend you are also lending them your car insurance. Insurance people call this permissive use. As you've probably already gathered, this also means any deductible due will come back to you. The only case where the driver's insurance would get involved is if your coverage is tapped out and extra coverage is needed.

Myth or truth?Your zip code does not factor into your car insurance rates.

MYTH. While it isn't a huge factor, where you live is a factor in how your car insurance rates are figured. It actually makes sense if you think about it, crime rates, natural disasters, and city versus suburb, all impact the possibility of harm to your vehicle.

Myth or truth?My homeowner's policy covers my jewelry.

Technically, truth. Most homeowner's policies do cover jewelry but at a fixed amount. Typically it's only around $1,500. If you need more coverage, you have to "schedule" it. Yep, that's what it's actually called. I have no idea why.

Myth or truth?My homeowner's policy should cover the market value of my home.

MYTH. If you buy a home for $200,000 it would make sense to most people to get $200,000 of coverage, but homeowner's insurance doesn't actually work like that. Instead your homeowner's policy should be for the amount necessary to REBUILD the house. Think about it, if you buy a home for $200,000 but it costs $300,000 to rebuild it, you better hope you have $300,000 of coverage. The only time your homeowner's insurance coverage amount will be lower than the price you pay for the home is if you live in a very inflated housing market. For example, in California you could a buy a home for 1.2 million, but the house may only cost $800,000 to build.