April Fools’ Insurance Myths: These Policies Are No Joke!

The line between fact and fiction is a little blurry sometimes, so it can be hard to distinguish April Fools’ insurance myths from strange but real policies. After all, some insurance policies cover damage from aliens and ghosts, yet coverage generally isn’t available for pandemic-related losses. While some weird types of insurance may seem unbelievable, specialty insurers may ultimately be able to cover any actual, measurable loss for the right price.

Zombie and leprechaun insurance are April Fools’ insurance myths, but policies covering fantasy football, space flight, celebrity body parts and laughter-related fatalities are actually real.

Keep reading to learn more about unusual insurance coverage examples, common insurance myths people believe and what types of uncommon perils may or may not qualify as insurable losses.

What Is ‘Unusual’ or Specialty Insurance?

Specialty insurance refers to customized policies designed to cover unique losses or high-risk exposures. In some cases, these policies may cover unusual risks that the average American is unlikely to ever encounter. For example, one Florida insurance salesman offers alien abduction insurance policies with a $10 million coverage limit — with the caveat that the policy will only pay out $1 per year for 10 million years to policyholders who can prove they were abducted.^[1]

Conversely, specialty insurance may also refer to broadly useful coverages that simply fall outside of the most common insurance categories, such as home, auto, commercial, health and life insurance. For example, you could buy specialized event insurance to cover sudden cancellations, collectibles insurance to cover damage to high-value art collections or difference in conditions insurance to cover perils that are excluded by your basic home insurance policy.

Standard insurance companies may not cover especially unusual losses, so you may need to purchase coverage from an insurance carrier that specializes in providing niche policies. For example, surplus lines insurance companies can cover unique risks — like those faced by businesses that transport hazardous materials — but they may not be licensed by state insurance departments or backed by state-run guaranty associations.^[2]

Strangest Insurance Policies That Sound Like an April Fools’ Insurance Myth

For examples of some of the weirdest insurance policies that actually exist, check out the following sections.

Body Part Insurance

Celebrities who rely heavily on a particular part of their body to perform their job or maintain their public image may have the option to buy insurance for that specific body part, meaning they can be reimbursed for their financial losses if a sudden accident severely injures that body part and — by extension — their brand. For example, musician Gene Simmons reportedly insured his tongue, and professional football player Troy Polamalu’s hair was insured.^[3]

Of course, individuals who purchase body part insurance may be required to take extra precautions to protect their insured body parts against sudden losses — or else, have their policies voided. For example, a Dutch winemaker who insured his nose due to his reliance on his sense of smell is forbidden from riding a motorcycle or working with professional knife throwers and fire-breathers by the terms of his policy.^[3]

Second Coming Coverage

In 2000, a trio of sisters in Scotland took out a policy from a British insurance company to cover child-rearing expenses in the event that one of them experienced a virgin birth and brought about the Second Coming of Jesus Christ. The policy remained in force for several years, but it was ultimately canceled in 2006 amid protests from the Catholic Church.^[4]

Kidnap and Ransom Insurance

If you are abducted by an extortionist and held captive, kidnap and ransom insurance can cover the costs of hiring negotiators and reimburse you for the amount that is paid to secure your freedom — up to your policy’s coverage limits. Ransom reimbursement insurance is most commonly purchased by large, multinational corporations whose executive officers risk being kidnapped while on business trips in foreign countries.^[3]

Lloyd’s of London Specialty Policies

Lloyd’s of London is an insurance and reinsurance market that is renowned for underwriting strange risks through its member insurers. Examples of some of the weirdest policies Lloyd’s has sold include the following:^[5][6][7]

• Monkey insurance: A 19th-century Lloyd’s underwriter sold a life insurance policy for a monkey. Following the monkey’s death, its owner received an insurance payout, and the underwriter had it taxidermied and put on display in his office.
• Beard insurance: To preserve their appearances, 40 members of the Derbyshire Whiskers Club took out insurance policies to protect their facial hair against fire and theft.
• Space insurance: Lloyd’s has provided several types of coverage related to satellites, including coverage for damage to the satellites themselves, business interruption costs related to satellite damage and even liability claims in case of a lawsuit against the satellite owner on account of falling space debris. In addition, Lloyd’s has provided insurance coverage for private space flights.
• Death-by-laughter insurance: One comedy troupe purchased a specialized liability insurance policy from Lloyd’s that shielded its members from financial losses in case they caused an audience member to die from laughing too hard.
• Loch Ness Monster insurance: A Scottish whisky company once promoted its business by offering a sizable cash prize to anyone who could capture the mythical Loch Ness Monster alive — and bought an insurance policy to cover the prize payout on the off chance that someone succeeded.

Even Lloyd’s won’t cover every risk, however; it declined to insure the director of “2001: A Space Odyssey” against the discovery of intelligent alien life rendering his film inaccurate prior to its release.^[5]

Fake vs. Real: April Fools’ Insurance Myths and Ideas Explained

To help you grasp which seemingly fantastical insurance coverage types are and aren’t the real deal, take a look at the following table, which includes a mix of both existing and made-up insurance coverages.

Can You Insure Anything?

While you can purchase bespoke insurance policies to cover most types of property and financial losses, certain risks are considered uninsurable, meaning they are not eligible for coverage under any insurance policy. For example, P&C insurance is designed to cover sudden, unexpected losses, so progressive property damage from wear and tear generally isn’t covered.

In other cases, losses may be considered uninsurable due to their unpredictability and potentially massive scope. Examples of such risks include the following:^[16]

• Reputational risks: Although public relations crises can contribute to legitimate financial losses, most commercial insurance products won’t reimburse you for revenue lost due to reputational harm. Some policies will, however, cover the costs of crisis management consulting to help mitigate reputational risks.
• Regulatory risks: Changes in state and local laws regulating businesses are incredibly hard to predict, making it difficult to forecast insurance risk related to regulatory changes. As a result, you may not be reimbursed for monetary losses triggered by updated regulations.
• Trade secret risks: Similarly, the scope of harm incurred when a company’s trade secrets are stolen or leaked can be difficult to measure, so insurance carriers are unlikely to offer comprehensive protection against these losses.
• Political risks: Insurance companies generally don’t offer coverage for losses stemming from war, expropriation or similar political risks, leaving many policyholders with no option other than to attempt to self-insure against these unpredictable perils.

Common Insurance Myths People Believe

Here are examples of some of the most common insurance myths people commonly fall for — and what the truth is in each situation:^{[17][18][19][20]}

• Red cars are more expensive to insure: Insurance companies don’t take car color into account when setting your auto insurance rates, so you won’t have to worry about paying more just because your vehicle is red.
• Homeowners insurance covers flood damage: Most home insurance policies exclude coverage for flooding, meaning you will need to buy separate flood insurance to fully protect your property if you live in a high-risk flood zone.
• Landlord insurance covers tenants’ belongings: While your landlord’s insurance will cover the physical structure of the home you rent, you will need your own renters insurance to cover damage to your belongings.
• Home insurance is sufficient for home-based businesses: Homeowners insurance policies typically offer little to no coverage for property damage and liability claims related to the operation of a home-based business. For complete protection, you’ll generally need to obtain a commercial insurance policy in addition to your home insurance.
• Using your health insurance too much will make your rates go up: Unlike most other types of insurance, health insurance premiums do not factor in your claims history. As a result, you don’t have to worry about your monthly health insurance bill rising every time you need to access medical care.
• Work-based life insurance is enough: The coverage limits for employer-sponsored life insurance policies are often far lower than the recommended coverage amounts, so you may need to consider supplemental coverage to make sure your beneficiaries will be fully taken care of in the event that you die suddenly.

Are April Fools’ Insurance Offers Ever Scams?

In general, insurance companies don’t offer special discounts related to holidays, so any website that purports to offer lower insurance rates in honor of April Fools’ Day may be perpetrating a scam. Fortunately, many insurers offer identity theft insurance, a specialty insurance product that can cover credit monitoring services and other associated expenses if your identity is stolen.^[21]

Why Do Unusual Insurance Policies Exist?

For the most part, unusual insurance policies exist because there is a demand for them — even if that demand is small. Strange insurance policies often cover real, meaningful risks that simply happen to fall outside the scope of standard insurance coverage.^[3] Ultimately, no matter how weird or uncommon a certain loss is, it may be eligible for coverage under an insurance policy as long as it is accidental and causes actual, measurable harm.^[22]

April Fools’ Insurance Myths at a Glance

1. Specialty insurance may refer to any policy that covers unique risks, provides coverage for high-risk policyholders who may otherwise be ineligible for coverage or offers higher coverage limits than a standard insurance policy that would otherwise cover the same losses.
2. The umbrella of specialty insurance may include relatively normal policies — such as collectibles and event insurance — as well as strange policies that the average insurance shopper would have little to no need for, like body part, paranormal activity and ransom reimbursement insurance.
3. Any sudden and accidental loss that results in real and measurable harm may be eligible for coverage under some insurance policy, but certain risks are considered uninsurable, including reputational harm, regulatory changes, trade secret theft and war.
4. Learning the ins and outs of insurance is necessary to avoid falling for false insurance myths, like the idea that vehicle color influences car insurance premiums, homeowners insurance provides complete coverage for home-based businesses or visiting a health care provider will make your health insurance rates go up.