Stay on track: Top car insurance myths debunked
The importance of having car insurance is something every car owner understands. In India, as per the Motor Vehicles Act, 1988, it is mandatory to protect your car with insurance coverage. The true purpose of insuring your vehicle is to shield you against financial loss not only when your car is damaged, but also if your car has been involved in an accident where a third party has suffered damages or loss.
Now, car insurance, like life insurance or health insurance, may not be the simplest of concepts. Lack of proper knowledge can lead to customers making ill-informed decisions about car insurance. To help you make the right choice, we have compiled a list of the most common myths surrounding car insurance.
● Purchasing car insurance is a tedious, hassling process
Truth - It is, in fact, quite the opposite! If you want to buy car insurance in today’s times, you needn’t get out of your house! You can simply go online, compare different plans, get insurance quotes from providers and choose the plan that is right for you. In most cases, you can simply call the customer service team who will guide you through the process of buying car insurance online. All you have to do is provide details about yourself and your vehicle, review the terms and conditions of the policy, select any add-ons if you wish, and make the premium payment. What’s even better is that you can renew your car insurance online with equal ease.
● Old vehicles don’t need insurance
Truth – Your vehicle could be 20 years old, or 2 months old, but you still need to get it insured. If you have just purchased a new car, you will need to get it insured before you can drive it, as per the Motor Vehicles Act, 1988. Older cars, on the other hand, will usually have a low or zero resale value. However, the parts of your old car may be much in demand, making it an ideal target for theft.
● Experienced drivers don’t need to get their cars insured.
Truth – Yes they do, unless they want to be fined! As per the Motor Vehicles Act, 1988, it is mandatory for all vehicles to be insured under a third party liability policy at least. You may be the most experienced one behind the wheel in your opinion, but you still need to have your wheels insured to legally drive them on the road.
● I can use my vehicle for any purpose
Truth – Again, no! One of the terms that is a standard part of every car insurance policy, is, that the insured vehicle can only be used for purposes that have been declared in the policy, and no other. So, for example, if you have taken a car insurance policy for your personal car, the policy will not cover for loss/damage caused to your vehicle or by it to a third party, while being driven for commercial purposes.
● No claim bonus cannot be transferred from one insurer to insurer
Truth - No claim bonus is the insurer’s way of rewarding you for not raising a claim during the policy year. And yes, you can transfer your no claim bonus when you switch insurers and not lose out on the benefits. All you have to remember in this regard is that you must get a new policy within a period of 90 days after your old policy has expired.
● My claim can be honoured because it is my driver driving without a licence, not me
Truth – Driving without a valid driving licence is an offence punishable by law. Be it you, or your driver who is driving without a licence, if the vehicle suffers losses, the insurer will not be liable to pay for it.
● My policy covers me internationally
Truth – No, it doesn’t, unless the same has been expressly specified in your policy document. If your vehicle suffers damages while being driven outside the boundaries of the country, insurers will usually not be liable to pay for the damages. To drive outside India, you must confirm with your insurer and get additional coverage depending on the regions you are driving to.
● If my car is totalled, I can make a claim equal to the cost of a new car (same model)
Truth – This is not true. Every car insurance policy includes the vehicle’s Insured Declared Value (IDV), which is the maximum amount that your insurer is liable to pay if a claim is ever raised on the policy. It is the maximum amount payable if your vehicle suffers total loss / total constructive loss / is stolen / damaged beyond repair within the policy period. The IDV of the vehicle changes as the vehicle gets older, as it is calculated based on the vehicle’s current market price and depreciation applicable. So, as the car gets older, the IDV is calculated as per the current market price, also taking depreciation into consideration.
● Car insurance premiums will vary depending on the colour of the car
Truth – False! The colour of your car has no bearing on your car insurance policy premiums. They do, however, depend on a range of other factors such as the age of the car, model, make, engine capacity, your own driving habits, cost of repairs, anti-theft devices installed, etc.
● Being a teetotaller or having anti-theft devices installed does not affect premiums
Truth – If you are a teetotaller or have installed anti-theft devices in your car, you are likely to get discounts on premiums. The logic behind this is simple. Installation of anti-theft devices is like adding a layer of protection to your vehicle’s safety, as is being a teetotaller. If you have installed ARAI-approved anti-theft device in your vehicle, you can be eligible for even greater discounts. If you are a teetotaller, you can be eligible for abstainer discount.
● Private auto insurance policies cover vehicles for personal and business use
Truth - Be it a private or a public car insurance plan, it will either cover your car for personal use, or for commercial use. If you have taken a policy on your personal car, you can only our use it for private purposes. The same goes for policies that have been taken for commercial use vehicles.
● Car insurance policies can be terminated anytime
Truth – If you have a car insurance policy, it can either be cancelled by you, or by your insurer. An insurer has the right to cancel your policy if you have misstated facts, given incorrect information, or have failed to pay the renewal premium for the policy. Unlike life and health insurance policies, car insurance policies do not have a free look period where you can sample the policy. If you wish to cancel your car insurance policy, make sure you at least have a third party liability policy active on your vehicle.