5 myths related to car insurance policy busted

5 myths related to car insurance policy busted

Insurance is the best option to save oneself in case of happening of an event with enormous damage. However, for cars and other vehicles, it is necessary to have the insurance as per the government norms. Usually, people believe that if they have car insurance, they can be safe in any situation. It is half-truth as there are also many terms and conditions apply for claim of the insurance. Yes, to a large extent, one can be safe in case of theft or damage due to accident but not in every case.

Many myths are prevailing in society regarding car insurance policies and plans. Here is a small attempt to bust a few of them, which can help users keep eyes open and check the policy as well as its use while he is buying or it is in force.

• Buying car insurance is a time-consuming process: Usually, it is believed that insurance companies take a lot of time in issuing policies, and it is also not much required to have insurance of a car if one does not use it much. This is the biggest misconception in the market. It does not matter whether you drive the car once in a blue moon or regularly. You need to have insurance of the car as it is mandatory as per the vehicle act. The process of buying insurance is also now online and much simple than before. Hence, it is no more time-consuming process.
• Portability of car insurance will lead to seizure of no claim bonus: Nowadays, due to the availability of many companies in the market, it is possible for the buyers to change policy from one to another service provider. Every company offers various features, and one can go with any company if he is not happy with his current service provider. However, it is said that if the company is changed, the no claim bonus on the policy is seized, which is again a big myth. The moment one goes for buying a policy, he is asked to furnish details of his previous insurance policy, and accordingly, the no claim bonus is also provided by the new service provider. It is as per the guideline of the regulatory authority only. Hence one who wants to port his insurance policy from one service provider to another, there is nothing to worry about no claim bonus for the previous year.
• If the car is a total loss, I will get the amount of new car: Usually, insurance is taken to safeguard the monetary loss that one has to suffer due to some accident or other unforeseen incidents. However, it never means that if the car is at a total loss, the company will provide an equivalent amount to the new car. As a rule, there is always the insured declared value, and one can claim the maximum amount for the car to that extent only. Hence if the car is old enough, it will not fetch the value of the new car, but yes, the policyholder will not have to bear the loss in any case. If, after the claim, one wants to buy a new car, he has to add the difference amount of price of new car and IDV of the past car.
• As I am from the Rural area, I don’t need car insurance: As per the norms, it makes no difference whether the policyholder lives in a rural area or an urban one. It has nothing to do with the frequency of driving the car also. The rule here is simple. It says if one has a car, he has to buy insurance. Hence even if one drives in an area where there is no traffic still, he cannot have any concession to this rule. Your driving skills and traffic in which area you drive the car also have nothing to do with the insurance premium amount.
• An old car can have cheap car insurance: This is another big myth prevailing in the market. The premium of the car does not depend on the age of the car only. Many other factors affect the premium. It is a fact that with the old car, the insured declared value will be low, and hence the premium will also reduce. However, it depends on the record of the accident in the past year, the age of driver, kilometers driven in a year, and the condition of the car also. If one has a bad record of the accident in the last year, he may not get the no claim bonus, and in that case, the premium of the insurance may be more also. However, if the IDV is low and there is no claim in the last year, one may have to pay low premium also.

Hence, these are the myths that prevail in the market, and one needs to check thoroughly before believing in any of these myths.