Insurance is a topic that still confuses many as it is a blanket term with many facets. Talking about vehicle insurance, for starters, it is important to know that having a third-party car insurance policy is mandatory as per the Motor Vehicles Act, 1988. Under a third-party cover, the liabilities arising out of an accident with a third-party are covered. On the other hand, a comprehensive policy offers extensive coverage, i.e. it provides protection against third-party liability as well as own vehicle damage.
Before purchasing an insurance policy you would ideally consult with your friends and family about their experiences with different insurers in the past. Though they are a good source of primary data, it is also prudent that you conduct your own research as there are many myths that people believe in which they can inadvertently pass on.
Hence, to clear the air, let us debunk 7 misconceptions or myths you must’ve heard about car insurance.
Myth 1– If your friend is on the steering wheel and your car and gets involved in an accident, he/she is responsible for the damage caused and not you.
The car insurance policy follows the car and not the driver. So if your friend has gotten into an accident, your insurance company will provide coverage as long as the person driving the insured vehicle holds a valid license.
Myth 2– The color of your car will affect the premium amount.
Your premium is determined by aspects such as the car’s make and model, IDV, age of your vehicle, etc., and not its color.
Myth3– If you reside in a rural area, your car is less likely to get damaged and so you don’t find the need to get it insured.
It does not matter where you reside, it is mandatory for every car owner in India to have the basic third party car insurance as per the Motor Vehicles Act, 1988.
Myth 4- Switching your insurance provider will result in the loss of the accumulated NCB.
No-claim bonus (NCB) is the concession you receive in the form of a concession and so it remains with you. At the time of renewal, even if you want to switch to a different insurance company, it is possible to transfer your accumulated NCB; you don’t have to worry about losing it.
Myth 5– Your car is old and so you don’t need an insurance policy to protect it as there are fewer chances of it getting stolen.
In fact, your car can not only get stolen, it is prone to accidents as well. It is true that the Insured Declared Value (IDV) depreciates as years pass by but that doesn’t mean you don’t buy a car insurance policy. You can go for a comprehensive motor insurance policy as it offers protection for third-party liability as well as own damage.
Myth 6– If your car gets damaged by natural calamities such as floods, earthquakes, etc., your insurance company won’t provide you with coverage.
If you opt for a comprehensive policy, the insurance company offers protection against any damages caused to the car due to natural or man-made calamities. In situations like floods, earthquakes, fires, etc., compensation will be provided to repair the damages to the car.
Myth7– If there is a case of total damage, the insurance company will be liable for the cost of your car.
In such cases, the insurer is liable to pay the IDV of your car if you had opted for a comprehensive motor insurance policy.
It is important to clarify your doubts, educate yourself with the insurance claim process and check if what you’re hearing is a myth or a fact before jumping to conclusions. Look for concessions and compare various insurance quotes and go for the one that suits your needs