Seven Car Insurance Myths You Should Avoid
As prescribed by the Motor Vehicles Act, 1988, car insurance is mandatory for all cars plying on the road. To the uninitiated, motor insurance is divided into two broad types, namely Third Party and Comprehensive. Third-party motor insurance, as the name suggests, provides cover for third party liability. Comprehensive motor insurance, on the other hand, provides a higher cover; it encompasses third party liability, own vehicle damage, and a personal accident cover as well.
Even in this present day and age, most car owners in India rely upon their dealers for a motor insurance policy, whether it is for their new car or when they renew it in the future. However, are you obligated to buy motor insurance from your dealer? Not really.
Instead of signing on the dotted line, take out the time to read the contents of the policy. It is advisable to stay aware of the realities which are clouded by the myths surrounding motor insurance so that you are not taken for a ride. Let’s look at some of these myths: -
Myth - Since your car is old, you do not need to get insurance for your car.
Fact - On the contrary, your car is still susceptible to accidents and theft. Even though the Insurance Declared Value (IDV) keeps depreciating with each year of ownership, never make the mistake of not having a motor insurance policy. With a comprehensive motor insurance policy, you are not only getting your own damage cover, but also coverage for third party liability which is extremely important.
Myth - Premium is determined by the color of the car, especially if it is red.
Fact - Far from it; the color of your car is not a factor that decides your car insurance premium. However, aspects like the model, make, style, engine category is taken into account to determine the premium.
Myth - Insurance cover is denied for acts of God.
Fact - A comprehensive policy does provide cover for natural calamities like floods, earthquakes, collisions with animals, and fire. The premium may be higher in coastal and earthquake-prone areas.
Myth - For a total damage car, the insurer is liable to pay the entire cost of the car.
Fact - Other than the zero depreciation policy, for all other policies, liability is limited to the extent of the declared IDV value of your car during that specific tenure.
Myth - Insurance is not transferable, and you lose NCB.
Fact – It is quite the opposite, in fact. On renewal, you can transfer your policy to another insurer without any issue.
Myth - An accident caused by a person other than you at the wheel absolves the insurer from all liabilities
Fact - As long as the driver is the holder of a valid license, the insurer is liable to pay the damages.
Myth - Cars in rural areas do not need insurance as the traffic is sparse.
Fact - According to the Motor Vehicles Act, 1988 motor insurance is mandatory throughout India, irrespective of the location.
The task of choosing the right car insurance can get difficult for many people because of the lack of clarity on many features. We hope that busting these myths will help you in your effort to find the best motor insurance for your vehicle.