Top 5 Common Myths About Car Insurance in India

Every individual and family wish to live a happy and peaceful life. For this, there are certain essential things to plan and things to avoid. One should always try to minimise financial liability and manage one's spending. Your financial management includes making investments and avoiding unnecessary liabilities through life insurance, car insurance, health insurance, and other types of risk coverage. Do not forget that systematic investment planning and stopping beliefs in car insurance myths can help you stay prepared against life uncertainties, including car accidents on the roads. There are myths in the market about several things that at many times result in negative consequences.

Under Section 81 of The Motor Vehicles Act, 2019, below are the penalties and fines for driving without an insurance policy. Under Section 81 of The Motor Vehicles Act, 2019, there are fines and penalties for driving without an insurance policy. For the first offence, the fine is Rs. 2000 and for the second offence, the amount is Rs. 4000 or imprisonment. You must never miss information on third-party liability insurance as it is known to protect you from third-party liabilities and abide by the law.

In this blog, we are going to talk about the prevalent 5 common car insurance myths that you should stop believing in.

The information discussed here may help enhance your knowledge and understanding, and make smart decisions.

#Myth 1 – Old cars do not need car insurance

The reality: No matter whether your car is new or old, you need to get your car insured. It is your personal decision to go for comprehensive car insurance or third-party liability insurance based on your needs. Keep in mind that old cars are more prone to theft because of their good quality parts including the engine and ease of stealing. So, for an old car, a comprehensive car insurance plan is highly recommended.

Let us make it simple and understand it with an example story –

Ravi, an experienced IT professional working in an MNC in Gurgaon, prided himself on his quick thinking and ability to save money. One day, while running late for a meeting, he decided to take a shortcut through a narrow residential lane. It was a rainy day, and the road was slick with water and mud. As he turned a sharp corner, Ravi’s car skidded and rammed into the gate of a beautiful, well-maintained residential property. The impact not only broke the gate but also damaged the owner’s vintage car parked inside.

Mr. Mishra, the property owner, rushed out in shock. His prized car, a 1965 Ambassador he had lovingly restored over decades, now had a dented door and a shattered headlight. He after a heated argument, insisted on compensation for the damage to both his gate and his car.

A wave of fear ran through Ravi’s mind. He had skipped renewing his car insurance the previous month, thinking, “What are the odds of something happening?” Now, he was looking at a repair bill of ₹1 lakh for the vintage car and ₹40,000 for the repair of the gate.

Without insurance, Ravi had no choice but to arrange money to compensate. The incident not only burned a big hole in his pocket but also taught him an unforgettable lesson.

The risks of driving uninsured were troublesome for him and his family. After this incident, Ravi ensured to renew his car insurance on time. He realised the limitless importance of motor insurance. He would have not suffered financial strain in case he had at least gone for a third-party liability insurance only.

Remember, driving without insurance might save you a few rupees in the short term, but an unexpected accident can cost you dearly in the long run. So, it is better to stay insured, and stay safe! Also, the Government of India through The Motor Vehicles Act, of 1988 has made Third-party vehicle insurance mandatory for all vehicles. Your legal liability that may arise due to death or disability in an accident or loss to third-party property is covered under your Third-party vehicle insurance.
Thus, old cars do not need to be insured. The myth is incorrect and you should not believe it.

#Myth 2: I will lose my accumulated NCB in case I transfer to another insurance company

Remember, NCB i.e. No Claim Bonus is your earned reward. You get it for safe driving and not claiming insurance. Thus, you get a percentage of the benefit for every claim-free year subject to its limit. The NCB can be redeemed with discounts in premiums that reduce your annual payable motor insurance. You can avail the benefit of your NCB during your car insurance renewal online or through an insurance broker or agent. Thus, you are eligible to get your NCB transferred to another insurer without hassle.

How is No Claim Bonus Calculated?

Know when your NCB Expires?

Your accumulated No Claim Bonus expires generally in the below two scenarios:

1. If a car insurance policy is not renewed on time, i.e. within 90 days of policy expiration.
2. If you raise a request for a claim irrespective of the amount.

#Myth 3: I have car insurance so I can drink and drive

This is incorrect and a dangerous misconception. Car insurance does not cover accidents caused by drunk driving. If you’re caught under the influence, your claim can be denied entirely. You may also face hefty fines or even imprisonment, depending on the laws in your area. Always prioritise safety and never drink and drive.

Myth 4: Car insurance does not cover small repairs

Not true! While some people believe car insurance only helps with big accidents, it can also cover minor repairs, depending on your policy. For example, if you have comprehensive coverage, it may help with windshield cracks, scratches, or other small damages caused by events like hailstorms or vandalism. However, always check your policy terms and the deductible amount to see if filing a claim makes sense. If you have accumulated NCB and wish to file a claim for a small amount, remember you will lose your NCB benefit. So, whenever you go for a claim, make sure you do a proper check to avoid any kind of inconvenience.

Myth 5: The car insurance claim process is truly complex

Many people think filing a claim is a nightmare, but that’s not always the case. Nowadays, insurers offer streamlined processes. Many claims can even be filed online or through mobile apps. To make it smoother, keep all necessary documents handy, like your policy number, photos of the damage, and an FIR (if needed). The key is knowing your insurer’s process beforehand.

What are the points to keep in mind when you buy car insurance?

Buying car insurance is essential for protecting your vehicle and finances, but it can be confusing if you’re not familiar with the process. You need to keep several things in mind while buying a car insurance cover. These help you minimise risk, take advantage of basic and add-ons, avoid financial liabilities, and enjoy peace of mind while driving. 

Below are the Key Points to Remember When Buying Car Insurance:

• Understand the Policy Terms: Read your car insurance policy carefully. Make sure you know what’s covered and what’s not, so there are no surprises later.
• Give Accurate Information: Be truthful when providing details to the insurer. This includes your car's details, your driving habits, and personal information. Any false information can lead to claim rejections.
• Maintain a Clean Driving Record: Avoid accidents and traffic violations. A good driving history can keep your premiums low.
• Compare Plans Annually: Don’t just renew your existing policy blindly. Check other plans and quotes every year to find better coverage or lower rates.
• Think About Add-Ons: Consider optional covers like Roadside Assistance (help in emergencies), Zero Depreciation (full claim without deduction for wear and tear), and Engine Protection (coverage for engine repairs). These can make a big difference when you need them.

Concluding Thought

Many people think filing a claim is a difficult task, but that’s not always the case. Nowadays, insurers offer streamlined processes. Many claims can even be filed online or through mobile apps. To make it smoother, keep all necessary documents handy, like your policy number, photos of the damage, and an FIR (if needed).

It is better to know about your insurer, background, claim ratio, product features, and more. The key is knowing your insurer’s process beforehand. This helps you choose the best from the rest. Also, please do not fall prey to motor insurance myths because they can cause you to suffer a big financial loss. Rather, stay safe, stay insured and drive safe. You can now buy car insurance also through our secure InvestKraft App.

FAQs

Q1. What is car insurance, and why do I need it?

Car insurance protects you financially against accidents, theft, and damages to your vehicle or others. It’s also a legal requirement in most places.

Q2. What are the main types of car insurance?

The main types are third-party liability (which covers damages to others) and comprehensive insurance (which covers your car as well as third-party damages).

Q3. How is my car insurance premium calculated?

Premiums depend on factors like your car’s make and model, location, age of the vehicle, driving history, and chosen add-ons.

Q4. Does being a good driver exempt me from buying car insurance?

No, car insurance is mandatory under the Motor Vehicles Act, of 1988, irrespective of your driving skills. Even if you're a great driver, unforeseen incidents can happen, and insurance protects you financially.

Q5. Can third-party insurance cover damages to my car?

No, third-party insurance only covers damage to others’ property or injuries caused by your vehicle. To protect your car, you need comprehensive insurance.

Q6. Does car insurance cover more than just accidents?

Yes, comprehensive insurance covers theft, natural disasters (floods, earthquakes), vandalism, and fire, in addition to accidents.

Q7. Do car modifications affect my insurance policy?

Yes, modifications can impact your premium. If not disclosed, your insurer might reject claims related to those modifications.

Q8. Should I claim for every minor repair?

Not necessarily. Frequent small claims may lead to a higher renewal premium and loss of your No Claim Bonus (NCB).

Q9. Is car insurance necessary for old vehicles?

Yes, insurance is still mandatory for older cars. While their market value may be lower, insurance covers liabilities and unforeseen damages.

Q10. What factors influence car insurance premiums?

Your car premiums depend on various factors, including your car's age, model, usage, location, claim history, and the type of coverage you choose.

Author: Rajesh Mishra

Rajesh Mishra is a professional and multilingual writer with over 12+ years of versatile experience in content writing.

He has crafted compelling narratives across a diverse array of industries, including BFSI, fintech, IT, pharmaceuticals, e-commerce, education, fashion, and more. He is a commerce graduate from Mumbai University. His strong academic foundation and passion for storytelling enable him to engage audiences and deliver impactful content.

 

He is adept at transforming complex concepts into clear, relatable language, making his work accessible to both, industry professionals and everyday readers. He thrives in dynamic environments, leveraging his extensive knowledge to create articles, blogs, whitepapers, and marketing materials that resonate with target audiences. Driven by a commitment to excellence and a keen eye for detail, Rajesh Mishra continuously explores emerging trends and technologies, ensuring his content remains relevant and thought-provoking.