Similar to the stock market, everyone believes that he or she is an expert with insurance. People with no real background or training pass around advice that, quite frankly, can be harmful.

Insurance agents typically have to be trained and licensed by a state agency before selling protection that can have a serious impact on people’s lives.

Let’s take a look some of the most popular myths about insurance:

If you have insurance, you should use it for every covered incident.
 

Actually, insurance should be used when an incident occurs that would cause you financial hardship. If you can afford a small accident, for example, you should pay for it out of your pocket, otherwise, you may see an increase in your premium.

And, some types of insurance just aren’t worth buying. You should determine the risk of certain incidents and determine that either they may not affect you, or may not be financially catastrophic.

Everyone needs life insurance.
 

If no one will be adversely affected by your absence, then this insurance may not be necessary. Typically, life insurance provides for a spouse or children left behind after death. If no one depends on your income, then you may not need life insurance.

However, even if one spouse is a full time homemaker, their absence could create a financial hardship. A homemaker would have to be replaced by a housekeeper, cook and child care services. If the non-working spouse contributes to the household, their absence should be covered.

I don’t need flood insurance because my area isn’t high risk.

Even if your area isn’t considered high risk, it may still be prone to flooding. If it has a history of flooding, you may want to have a professional assess the risk to determine whether you should be covered.

Extending Auto Insurance to cover business usage is only for home businesses.

If you or a family member uses the car for anything to make money, it may not be covered by your personal insurance. Be especially careful if the outside usage is for a part-time job, such as delivery of goods.

If there is anything you are uncertain about when it comes to insurance, be sure to investigate. Don’t make assumptions about your policy.

By Darryl James