The Most Common Insurance Myths in Australia — Busted

Australian insurance is surrounded by persistent myths that cause people to either overpay or end up dangerously underinsured. Here are the most common ones — and the truth behind them.

Myth 1: Red cars cost more to insure

False. Australian insurers don't factor in the colour of your car. What they do factor in: make, model, age, engine size, your driving history, where it's parked overnight, and how far you drive annually.

Myth 2: Medicare covers everything

Medicare covers doctor visits, public hospital treatment, and some diagnostics. It does not cover dental, most allied health (physio, optical, psychology beyond 10 sessions), private hospital beds, or ambulance in most states.

Myth 3: Comprehensive insurance covers floods

Not always. Many comprehensive car and home insurance policies exclude certain types of flood — especially 'defined events' like storm surge vs. riverine flooding. Read the PDS. Post-2022 flood event, many insurers have tightened flood language significantly.

Myth 4: You don't need travel insurance for domestic trips

Domestic travel insurance can cover flight cancellations, accommodation costs if you're hospitalised, and luggage theft — none of which Medicare or your credit card necessarily cover. Worth considering for expensive or non-refundable trips.

Myth 5: Loyalty rewards you with better premiums

Australian insurers have been found to charge long-term customers more than new customers — a practice ASIC has scrutinised. Comparing at renewal every year is one of the most reliable ways to save on insurance.