5 Myths About Buying Car Insurance Busted! Read on

Lack of appropriate information about car insurance is the main reason for a lot of ambiguity surrounding it. There are so many different notions floating around, and sometimes it’s challenging to differentiate between facts and myths. So we decided to bust the top 5 myths about buying car insurance to help people select a car insurance plan that best suits their needs and budget.

Myth 1: Lengthy paperwork is involved while purchasing car insurance

The mere mention of the word insurance immediately triggers the thought of lengthy, tedious paperwork to read, understand and sign and long conversations with an insurance agent to understand car insurance terminologies.

 Technology has changed how we live our lives, bringing in more efficiency and speed. To escape the offline hassle, you can buy or even renew your car insurance online, to escape all the hassle in just a few steps.

Also read: What is Comprehensive Health Insurance Coverage?

All you need to do is to fill out just the basic information of your vehicle, and you are instantly presented with a list of insurers. You can visit their websites, understand the benefits and exclusions and draw comparisons between different plans, and select a plan that fits your requirements. This will help you to enjoy the process of buying car insurance online and busting the myth at the same time.

Myth 2: Older cars have a cheaper car insurance premium

You may have heard in a fleeting mention that IDV (Insured Declared Value) is the key factor behind the premium of the car insurance policy. For the benefit of new people, IDV is the maximum amount your insurance company agrees to pay in case your car is stolen or damaged beyond the chances of being repaired.

So the general notion is that as the car gets old, the IDV reduces, making the premiums cheaper. But this is not always the case, there are other factors too on which your premium depends, like your age, kilometres the car has been driven, the No Claim Bonus (NCB) your overall claim history, the type of plan chosen to name a few. For example, if you have a history of high claim filing, then your premium may be slightly higher than usual.

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Myth 3: NCB is non-transferable when you change your insurer

For every claim-free year, the insurance company awards you with something called No Claim Bonus (NCB). It’s like a reward for driving responsibility. It’s a misconception that if you change your insurance company, you will lose the NCB. But the fact is your No Claim Bonus is transferable between insurance companies, as long as you get to renew your car insurance policy within 90 days of expiration, failing which is when this benefit expires.

Myth 4: Rural drivers don’t need car insurance

This is the most rampant myth that revolves around car insurance. Every single Indian citizen, irrespective of their demographic and geographic location, is mandated by the law to have third party car insurance. If you fail to abide by this rule, you will have to bear hefty penalties and may even have legal proceedings initiated against you.

While the Motor vehicles act 1988, has made only third-party insurance compulsory, it is important that as a car owner you should get comprehensive car insurance because it acts as a protective blanket for your car against unforeseen events and accidents. Even if you stay in a rural area with minimum traffic, you can’t predict natural calamities like cyclones, floods, earthquakes to name a few that can heavily damage your car. At such times, car insurance acts as a helping hand to sail through the financial burden.

Also read: Protect Your Mortgage With An Insurance Policy

Myth 5: During the loss of claim, you will get the cost of a new car

As mentioned earlier, IDV (Insured Declared Value) is the maximum amount that an insurance company pays to the insurer in case the car is stolen or damaged without any chances of repair. So, in other words, that’s the maximum amount you can claim from the insurance company.

With time, like everything else, the car also encounters wear and tear, the cost of the market value of the car decreases. IDV takes into account the depreciation of the market value of the car. So as the car gets older, the IDV also reduces, which means your total loss claim will not match the cost of the new car, but it will be decided as per the car’s market value.

We hope the above points have clarified the common illusions surrounding car insurance, and this has busted strong myths in buying car insurance by helping you make an informed decision.

Also read: How to Understand Why Life Insurance Matters

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