Insurance is a fact of life for most of us. You may currently be finding yourself enrolling in health insurance during this extended window, renegotiating your auto insurance policy based on extended work from home plans or shopping for a home insurance policy for your new house. And unless you’re an insurance policy wonk, there’s a good chance working through any combination of the above has left you scratching your head in confusion at least once.

Unfortunately, policy misunderstandings for all forms of insurance coverage can end up costing you more money in the long run. By distinguishing insurance facts from fiction, you’ll better understand your own policy and potentially save a few dollars along the way.

Here are five common insurance coverage myths that could cost you money and a few tips to help demystify your insurance coverage limits.

Myth 1: The at-fault driver’s car insurance company covers injuries following a car accident

This misconception about how auto insurance policies work is not wrong, it’s just limited. Let’s start with the truth in this statement. In most states, when you get into a car accident with another vehicle, there will be some lengthy back-and-forth investigations to determine fault. The driver who is found to be at fault will be required to foot the bill for damage to both vehicles and any medical expenses.

However, 12 U.S. states, including Florida, New Jersey and New York, are all considered “no-fault” states. Residents of these states will need to have what’s called personal injury protection, or PIP, which will cover the driver’s (and their passengers’) medical expenses should an injury occur. Consequently, no-fault PIP states tend to have higher insurance rates as a result of this additional coverage requirement.

Complaints about the cost of insurance in no-fault states have ramped up in the past few years. Many no-fault states are now trying to repeal their PIP rules and instead adopt at-fault rules to bring insurance prices down. That being said, if you live in a no-fault state, the minimum PIP coverage may not be enough. Even a non-life-threatening injury could cost nearly $30,000. If you’re underinsured in an area with high accident rates, consider increasing your coverage.

Myth 2: Car insurance policies cover car burglaries and stolen cars

Every state legally requires its drivers to have a minimum amount of liability coverage. But here’s the thing with liability coverage: It only pays for damage to the other driver’s vehicle (as well as physical injuries to other drivers in an at-fault state).

If your car is stolen or broken into, minimum coverage won’t cover you at all — regardless of any proof you may have.  Unfortunately, without comprehensive coverage, minimum liability coverage will only protect you against out-of-pocket expenses following an accident for which you’re deemed at fault, or it will cover your medical expenses from an accident in a no-fault state where PIP is required.

Car thefts have risen sharply in some cities, including New York, where car thefts were up 53% in 2020. If you live in an area where property crime rates are high, we strongly recommend adding comprehensive coverage to your existing auto insurance policy.

Myth 3: The entire cost of jewelry is always covered under a home insurance policy

Homeowners insurance policies are often fairly comprehensive. Most will include compensation for damage to the physical structure of your home following named incidents, as well as replacement costs or actual cash value for items in your home. That helps many homeowners rest a bit easier knowing a fire or theft will result in a fairly comfortable payout in most cases.

However, not all items in the home are covered for their entire value. Insurance providers have a separate category for “high-value items,” which often includes family heirlooms, antiques and jewelry (to name a few) and will only provide partial coverage for the cost of those items.

A rather stark six in 10 Americans don’t insure their expensive jewelry, such as wedding rings. And baby boomers are the least likely to protect their jewelry, with only 51% stating their jewelry is insured.

Most homeowners insurance policies allow you to add additional coverage for jewelry at a small expense. The more expensive your jewelry, the more you should consider adding this coverage to your homeowners insurance policy. Failing to do so runs you the risk of only getting a small percentage of the cost following a loss event.

Myth 4: Small insurance companies are more expensive than nationally recognized brands

Most consumers assume that the larger the company is, the cheaper its rates will be. That thought process is intuitively based on economies of scale. If a business is large, has a larger number of customers and invests extensively in automated technologies, it should invariably offer cheaper rates, right?

Actually, car insurance rates are a good example of the opposite case. As of 2021, the national average cost of car insurance was $438 per six-month period. During that same time period, the national average cost of insurance at smaller companies was $360.

Defaulting to a national provider whose catchy commercials get stuck in your head may be easier than spending the extra time researching your local providers but may not get you the most competitive rates for your needs.

Myth 5: Health insurance enrollment is only available during open enrollment periods

While it’s true that obtaining health insurance is usually only possible during the open enrollment period, this is not always the case. Traditionally, there are two situations in which you can still enroll in a new health care plan outside of open enrollment: if you qualify for a life event or if you qualify for Medicaid or the Children’s Health Insurance Program (CHIP). Plus, under a new executive order, people who need health coverage as a result of the pandemic can apply on HealthCare.gov from Feb. 15 through May 15.

Under existing policies, a “qualifying life event” is any major event that would change your coverage significantly, such as having a baby, getting married, getting divorced or experiencing the death of a partner. If you believe you qualify, you can enroll within 60 days of the qualifying event.

If you’re eligible for Medicaid or CHIP, you can enroll to receive benefits at any time. There is no open enrollment period for individuals who qualify. Medicaid availability varies by state but is typically open to low-income families, pregnant women, the elderly and others that may commonly experience financial difficulties related to health coverage.

Whether you’re shopping for new insurance policies or looking to update an existing policy, it’s always a good idea to ask the right questions. If you’re unsure of your policy limits, talk to your provider. Doing so could help you avoid costly coverage mistakes.

Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.