“Myths tell us what those like us have done, can do, should do. Listen to the wrong myths, and we might even go back a few steps.”
Appropriate car insurance brings a protective cover, multiple benefits, including taking care of damages, relief during hospitalisation, legal advantages, less liability and payment of family expenses.
Less than 30% of all cars in India are not insured. Undoubtedly, due to growing awareness and ever-expanding internet penetration across the country, a large number of people now prefer buying or renewing car insurance online.
You have just bought a car, and you are looking for an insurance policy online, or you could be searching for insurance renewal options. Whatever the case may be, chances are you are struggling with certain misconceptions, wrong notions and popular fallacies.
Lack of adequate understanding of car insurance impacts your policy choices and adversely influences your financial interests.
Let’s try and separate the facts from fiction by briefly going through ten common car insurance myths in India.
- Myth: I am a mature and safe driver. I do not need car insurance.
- Reality: You may be, however, do you share the same thoughts about all other drivers on the road? In all likelihood, you do not. You may suffer due to somebody else’s negligence. Absence of insurance could result in you paying not only third party liabilities but also your own-car damages.
- Myth: Car insurance is only helpful when you are not at fault.
- Reality: Even if it’s your fault that has caused a major accident or damage to any third-party, your insurance will provide ample coverage and compensation.
- Myth: I can’t make an insurance claim for the accident as I was not driving my car.
- Reality: If your car is insured and driven by any individual with a valid license, the insurer will pay.
- Myth: I got an old car, and it doesn’t require any insurance.
- Reality: Third-party car insurance is compulsory under the Motor Vehicles Act, 1988. Driving a car without insurance will invite a substantial penalty. Also, the probability of old cars being stolen is relatively higher as it is easier to sell their parts.
- Myth: I need to pay a high insurance premium as my car is new. The old car means a low premium.
- Reality: The IDV (Insured declared value) plays a crucial role in deciding the premium amount. As the car gets old, the IDV reduces, and it results in cheaper insurance. However, that’s not always true. Your car insurance premium depends on many factors (driver’s age, cubic capacity, model, make, your driving record, claim history, to name a few). Also, a high number of car insurance claims could lead to increased premium next year. Age of the car is not the only criteria. The higher premium is usually charged for cars that are discontinued.
- Myth: I get paid in full by the insurance company if my car gets damaged.
- Reality: Insurance companies pay you after deducting for the depreciation. The IRDA approved chart of depreciation is used for this purpose, and the older your vehicle is, higher the depreciation rate will be. Buying a zero-depreciation add-on cover allows you to get the full claim paid without depreciation deduction. Please note, it can be availed for new cars only, and it carries specific limitations.
- Myth: Total damage to my car means the claim amount will be equivalent to the cost of a new car.
- Reality: Your IDV refers to the maximum amount payable by the insurance company. It is the highest amount one can claim within the insurance policy period. In case of total damage, you get the amount that sufficiently compensates you as per the financial position of your car before the damage.
- Myth: I lose my NCB (No Claim Bonus) if I transfer my insurance from one insurance company to another.
- Reality: You can transfer your NCB and retain the benefits if you get the new insurance within 90 days after the expiry of the old policy.
- Myth: Getting car insurance is a complicated and time-consuming process.
- Reality: Thanks to the internet and evolving technologies, buying or renewing a car insurance policy is a reasonably convenient task. You need to fill in necessary details, compare instant quotes, select an insurer and follow instructions to receive the policy in your mailbox.
- Myth: Car insurance is too expensive.
- Reality: Buying car insurance online is much cheaper as compared to the conventional approach. Credible insurance comparison portals such as Quickinsure.co.in are the preferred choice for many looking for policies from prominent insurance providers at competitive prices.
Car insurance is an unavoidable legal requirement. It not only protects you, your car and your money, but it also brings peace of mind. Knowing the facts and nuances of car insurance will make you an informed consumer and also enable better decision making.
Sources: IRDAI, General Insurance Council, India and multiple other information channels.