5 Myths About Car Insurance Busted
Although buying car insurance is mandated by law, many people are still wary of buying or renewing it. This is majorly due to some common misconceptions about buying car insurance. Here, we have busted five of the most common myths about car insurance: –
Myth 1: Buying car insurance is a tedious and time-consuming process
Fact- Although this statement might have been true in the past, things have changed drastically since the introduction of online car insurance. Now buying car insurance online is a simple and quick process. All you need to do is visit the insurance provider’s website and fill in a few basic details about your vehicle and make the payment online. If you follow the steps correctly, you will have your car insurance policy in your email inbox within a few minutes.
Myth 2: Older cars can be insured at cheaper rates
Fact – Although a car’s IDV (Insured Declared Value) decreases with time, there are many other factors that determine your car insurance premium. Factors such as the type of coverage, your driving record, your age, your claim history also affect the amount of car insurance premium you have to pay. For instance, if you make a high number of claims, your premium will not reduce and may even be higher in the next year.
Myth 3: No Claim Bonus will be lost in the transfer of the car insurance policy
Fact: The No Claim Bonus is a reward offered by insurance companies for not making a claim in a given year. And if you switch to a new car insurance provider, your NCB will also be transferred. However, to retain your NCB, you must renew your car insurance policy within 90 days of the date of expiry of your existing policy. If you don’t renew your policy within 90 days, you will not be able to retain your NCB.
Myth 4: Insurance is not of much use to me as I am a good driver and my area does not have any traffic
Fact – No matter how good a driver you are or how well you maintain your car, having a valid car insurance policy for your car is a mandatory requirement in India under the Motor Vehicles Act 1988. Besides, it’s not just accidents, a car insurance policy offers protection against damage to your car due to natural calamities like earthquake, cyclone, typhoon etc. Also, if your car is stolen or damageds due to theft, riots or terrorist activities, a car insurance policy will pay for the damages.
Myth 5: In case of total damage, I will get a claim amount equivalent to the cost of a new car
Fact: Every insurance policy has an Insured Declared Value (IDV) mentioned in the policy which is the maximum sum payable by the insurer for a vehicle at the time of an insurance claim. As the car gets older, the IDV reduces due to depreciation. Hence, if your car is completely damaged, you will get a claim amount that is close to the present market value of your car as opposed to the cost when you bought it. Some insurance providers also offer the provision to calculate your IDV via car insurance calculators, so that you can understand the amount of claim you can expect.