February 27, 2021

5 Misconceptions About Car Insurance That You Shouldn’t Believe

5 Misconceptions About Car Insurance That You Shouldn't Believe

Buying a new car can be exciting, whether it is the first time or the umpteenth. But your responsibility does not end after buying one. You also need to complement your purchase with adequate insurance coverage. Though many misconceptions are floating in the market, fret not! This article clears five such fallacies about car insurance that you should not believe. Continue reading to know more.

#1 Safe drivers do not need car insurance

The most common misconception about car insurance is that safe drivers do not need one. While it is a regulatory requirement, the Insurance Regulatory and Development Authority of India (IRDAI) makes it mandatory for all car owners to have at least third party car insurance cover. Third-party coverage guarantees protection from legal liabilities due to a third person that may arise during an accident or property damage. You can be sure about your own driving being safe, but what about other drivers on the road? A car insurance plan helps to safeguard your vehicle against these unexpected damages. So, beware of this commonly believed misconception that a safe driver does not need an insurance cover. Instead, having car insurance at all times goes a long way in securing the safety of you and your car.

#2 Old cars do not require car insurance anymore

Another misunderstanding is that an old car is no longer required to have an insurance cover. This mostly comes from someone who owns a car for a long time. Though it might require you to continue the car insurance renewal, considering the possibility of theft, it is highly advisable to keep doing so. The spares for old cars are hard to find and that makes them lucrative for theft. If you continue to opt for a comprehensive car insurance policy, such events like theft can be insured.

#3 The premium is higher for new cars

The premium of a car is not based solely on its age. Various factors are considered in tandem to determine its premium. Some examples are the cubic capacity, the model of the car, its variant, the accessories fitted, etc. Further, any vehicle that is discontinued by the manufacturer is harder to repair and thus, the premium is impacted. Hence, remember not only the age of your car is crucial, but also other factors combined with it.

#4 The insurance company pays in full for damages

While this is an overly optimistic approach, you should note that depreciation is considered when you make an insurance claim. The insurance company pays the claim after subtracting the depreciation of the spares. Although, additional add-on like the zero-depreciation cover helps you secure this amount too. Along with depreciation, car insurance policies require you, the policyholder, to pay the deductible at each claim. There are two types of deductibles – standard and voluntary. Thus, it is never that the insurance company pays 100% of the claim made. Some expenses like the deductible are compulsorily required to be paid by you.

#5 All NCB is lost in case of change of insurer

Many car owners believe that switching their insurance company will cause a loss of no-claim benefits. However, this is not the truth. Instead, you can transfer your accumulated no-claim benefits to a different insurance company. You need to obtain the NCB transfer certificate and it is available with your new insurance policy.

These are the most common misconceptions about car insurance that you should not believe. While you steer-off these false impressions, make the right choice of insurance plans after comparing the various alternatives before purchasing one.