If you believe these popular misconceptions, you’re going to be underinsured or improperly insured, and you’re going to pay too much.

Here are the myths and the realities you should be thinking about instead:

1.Myth: Red cars are the most expensive to insure

Red will not cost you more green. Roughly 25 percent of drivers surveyed by Progressive Insurance believe that the color of their car is a factor in determining their insurance rate — especially if the car is red. But the belief that drivers of red cars pay higher car insurance premiums is a myth. Insurance companies will likely not even ask the color of your car when they’re calculating your quote.

2. People Who Decide not to Purchase Health Insurance Don’t Affect Others.

People who choose not to purchase health insurance eventually affect the lives of every American. There are many reasons why some Americans are uninsured. Regardless of the reasons, having so many uninsured individuals drives up the cost of goods when people get sick and cannot do their job. In addition, when many people in a company choose not to purchase health insurance, it sends a message to the employer that health insurance may not be an important benefit which in-turn could cost other workers a loss of their health insurance benefit.

3. Health insurance is a waste of money for the young and healthy.

It is true that different people need different levels of insurance. It does not make sense to pay for prescription drug coverage or maternity benefits if you know you don’t need it. A surprising number of people are paying for insurance benefits they don’t need. Health insurance should be viewed like car insurance. Would you pay a high premium to insure a car that isn’t worth very much money? Of course not! So why do people pay for “Cadillac” health insurance when all they really need is financial protection in case they get seriously injured? There are options. Younger and healthier people may benefit more from a low cost health plan with a high deductible. Emergency room services are extremely expensive and it makes sense to protect yourself from the financial havoc that can result from injuries beyond your control.

4. My Homeowners Policy Will Cover Me

Maybe water in your basement or the engagement ring you lost is covered; maybe not. “Unfortunately, many consumers make a lot of assumptions about what’s covered under a standard homeowners policy,” says Kim Holland, Oklahoma insurance commissioner. “But you usually need additional riders for losses from events such as sewage backup, food spoilage from power outages, earthquakes, and wind damage.”

5. My Auto Policy Pays for a Rental Car After an Accident

Not necessarily. Rental reimbursement isn’t included on all auto policies. And if you mistakenly think yours does, you could be severely inconvenienced if your car needs repairs after a crash. “The average car is in the shop for two weeks after an accident,” says Loretta Worters, vice president of the Insurance Information Institute. “It can easily cost $500 or more to rent a replacement car for that time period.” Also, if your car needs to be towed to a garage after an accident, your policy may not cover that either.

6. Insurance is a rip-off; buy only the minimum required

This idea occasionally surfaces on the Your Money message boards and in e-mails I get from readers. People’s suspicion of the insurance industry can be so profound that they’ll put themselves in real financial danger — the old cut-off-your-schnoz-to-spite-your-face response.

7. Drivers of sports cars get more tickets and thus pay higher insurance premiums.

Fact: That’s not necessarily the case. According to a study released in 2009 by Quality Planning Corp., leading the pack with the most violations are drivers of the Hummer H2/H3. Hummer drivers have almost five times the number of violations compared to the average. Drivers of three different Scion also made the Top 10 list. Others on the list include drivers of two models of the Mercedes-Benz (CLK63 AMG, CLS63 AMG), two Toyotas (Solara, Matrix) and the Subaru Outback Station Wagon and Audi A4.

8. I Don’t Need Disability Insurance… If I Become Disabled Social Security Will Take Care of Me.

Don’t count on Social Security to take care of all your needs if you become disabled. If you are able to get Social Security for your disability (not all get approved to receive disability benefits so don’t assume you will) then you will still have to wait months before you receive benefits and your disability needs to be long-term to qualify. And even if you qualify for benefits, will it match your current salary? Probably not. Find out more why disability insurance is important at Considering Disability Income Insurance.

9. My insurance company will pay for a rental car if my car is stolen or damaged in an accident. Fact: Even if you have comprehensive and collision coverage, it may not include a rental car. Rental car reimbursement is not automatically included in most car insurance policies, but you can add it at an affordable cost. According to the Insurance Information Institute, rental reimbursement coverage is available for $1 to $2 a month with most insurers.

10. Low Deductibles are Best for Home and Auto Policies

Keeping your out-of-pocket costs low if you need to make a claim may sound like a good idea, but it’s really not. For one thing, the lower the deductible, the higher the premiums. For another, “making a series of small claims may work against you in the long run if you’re costing the insurance company more than you’re paying in premiums,” says Vickie Bajtelsmit, chair of the Department of Finance and Real Estate at Colorado State University. “Claims definitely increase the chance of your premiums increasing.”