When it comes to car insurance, there are many myths and misconceptions that can mislead drivers, often leading to confusion and costly mistakes. These myths have been passed down for years, and many people still believe them without questioning their accuracy. However, car insurance is a critical part of being a responsible driver, and understanding it correctly is essential for avoiding issues that could arise in the event of an accident or claim.
In this article, we’ll debunk some of the most common car insurance myths and clear up the confusion surrounding them.
Common car insurance myths
Here are some of the cheapest car insurance myths you should stop believing from now:
Myth #1: Insurance is not needed for old cars
This is a common misconception among owners of ageing vehicles. They feel that since their car has depreciated significantly, paying for insurance is unnecessary. However, this myth is completely false and impractical.
The truth is that car or two wheeler policy is mandated by the Motor Vehicles Act for all vehicles plying on Indian roads, irrespective of their age. Your car’s insurance needs do not disappear as it gets older. In fact, older models can be more prone to theft and damage due to worn-out parts. Spare parts of vintage cars also command very high market rates.
Without adequate insurance, you remain liable for the entire cost of repairs, medical bills, legal fees and third-party damages from accidents. Even a small mishap can burn a hole in your pocket if you are uninsured. Being underinsured is no better, either.
So whether your trusted vehicle is 3 years or 13 years old, having a comprehensive insurance policy helps cover unforeseen events cost-effectively.
Myth #2: Premium depends on the car’s colour
This is a downright frivolous myth about insurance costs. Your car’s exterior shade has absolutely no connection to or bearing on the insurance premium amount. The car colour does not make accidents more or less likely anyway.
In truth, rational factors like make, model, variant, year of manufacture, engine capacity, etc., decide premiums along with individual owner profiles. Geography, claim history, anti-theft devices installed, etc., also matter.
So rest assured that owning a red, green or yellow car makes no difference to insurance costs. Even multiple cars of the same variant but different colours will have the same premium. Choose shades per your preference without any insurance colour bias.
Myth #3: Insurance does not cover natural disasters
Acts of God or natural disasters like floods, storms, lightning, earthquakes, etc., lead to massive damages yearly in India. However, a common myth is that these events are excluded from insurance coverage as being ‘acts of God’.
In reality, a standard comprehensive motor insurance policy provides coverage against such calamities, too, subject to policy limits. In fact, insurers offer special add-ons to enhance protection against common disasters like flooding, depending on the locality.
So rest assured that your insurer covers you in case of accidents caused by environmental factors beyond human control. Check policy terms for claim processes and specific inclusions.
Myth #4: Insurer pays full car cost on total loss
When cars are completely destroyed in accidents or disasters, owners expect to receive the entire vehicle’s cost as a claim amount. However, insurers actually pay the insured declared value (IDV), which depreciates annually and is much lower than the original cost.
The myth arises because owners confuse IDV value with ex-showroom price. IDV depends on the car’s age, model, and condition, and it keeps decreasing based on depreciation. Total loss claims are only settled up to the IDV amount specified when you bought coverage. Additional covers like zero depreciation add-ons can help bridge this gap.
Myth #5: Insurance policies cannot be transferred
A common misgiving is that changing one’s insurance provider midway leads to a lapse of coverage and loss of accrued benefits. But you can seamlessly port your cheapest car insurance policy to another insurer through an IRDAI-regulated process without any hindrances.
Your No-Claim Bonus, policy tenure, etc., are transferred to the new provider, so you face no loss of rewards or discounts. Insurers simply continue the coverage you had. Even claim settlements follow the original policy terms, so there is absolutely no disadvantage or gap in protection through porting.
Myth #6: If someone else drives my car and gets into an accident, the insurance won’t cover it
As long as the driver has a valid driving license and your policy covers accidental damage, your insurance will cover damages, even if someone else was driving. However, certain exclusions apply, such as when the driver is intoxicated or does not hold a valid license. So, no matter what you are driving, always check your car or two-wheeler policy for specific terms and conditions.
Conclusion
Car insurance is an essential aspect of responsible vehicle ownership, providing financial protection and ensuring compliance with legal requirements. Believing in myths can lead to costly mistakes and unnecessary risks. By understanding the truth behind these common misconceptions, you can make informed decisions, choose the right car or two-wheeler policy, and drive with peace of mind.
If you haven’t reviewed your car insurance policy lately, now is the perfect time to do so. Stay informed, stay insured, and drive safely!
