Owning a car these days is less about having a useful commodity and more about having a status-symbol to match up to others. Rolls Royce, Land Rover, Lamborghini, you name it… there are all sort of cars available in the Indian market to suit the needs of different types of car buyers. But maintaining a car is a bigger job than simply parking it in the garage, which is where car insurance comes into picture.
Read on to find 8 myths of car insurance busted in this article.
What is Car Insurance?
Car insurance is an agreement purchased by the owner of the car to mitigate costs incurred owing to an accident which damages the vehicle and to protect the car against theft. All car owners are expected to pay premiums towards a policy to the insurance company they buy the policy from. The damages to the car are reimbursed at the time of an accident.
Car insurance can be easily purchased and renewed from any general insurance company’s office branch and you can buy it online as well from any of the reputed companies. Car insurance is generally a very sought-after product and buying it online gives you the opportunity to avail discounts on the same. The premium amount to be paid in insurance is decided by the type of car, age of vehicle, age of the insured, Insured Declared Value etc.
Key benefits of Car Insurance
There are some key benefits of car insurance, which are:
- a) Personal accident cover
- b) Coverage against financial liability caused by injury/death of third party or damage to the property
- c) Coverage against loss or damage to the vehicle caused by theft, accident, natural calamities, hazards like fire, explosion, lightning strike, riots or strikes
d)Coverage against loss/damage to the insured vehicle
Types of Coverages Under Car Insurance
Generally, there are two types of auto insurance:
- a) Comprehensive insurance: This kind of insurance gives you protection against liabilities arising from theft, natural calamities, accidents, etc. This insurance includes both a third-party premium and own-damage premium as well. Own damage premium is decided on the basis of make and model of the car, age of the car, geographical location and engine capacity as well. It also offers a personal accident cover for the passengers, but that coverage is bought with the help of an additional premium.
A personal accident cover compensates the insured in the event of death, loss of a body part like an eye, limb, eyesight, permanent and total disability
- b) Third-party insurance: This is the most common type of insurance found in India and is mandatory for all Indian vehicles plying on the roads. This type of auto insurance covers damages to the third party in the event of an accident.
Protect Yourself by Investing in Car Insurance
There are several reasons to invest in car insurance besides safeguarding your vehicle from any damages. They are as follows:
- Third party insurance is mandatory as per Section 146 of the Motor Vehicles Act, 1988.
- The rate of vehicular accidents is high in India, especially due to the rapidly increasing traffic problem, ongoing road constructions and due to monsoon and water logging problems.
- You cannot control or predict manmade disasters like floods, earthquakes and similar hazards. An auto insurance will help give you a financial backing at a crisis like this one.
- In a case of death/disability, when a tough financial crisis is looming large on the family owing to medical costs, vehicle repair costs, third party liabilities and so on. Here, a car insurance will help reduce some of that burden.
- Be it a car part replacement or repair, the expenditure is quite high. Some insurance companies, however, provide cashless garage facility and roadside assistance to make things easier for you.
Uncovering Myths About Car Insurance
Just like any other thing under the sun, car insurance also has its share of myths. They are as follows:
Myth 1: An old car does not require insurance
Truth: As per Indian Motor Vehicle Act, 1961, it is mandatory to protect your vehicle through an insurance plan, regardless of whether it is an old vehicle or a new one. A low replacement value of the car might not justify a comprehensive insurance plan for you, but it can still be stolen and its parts as well.
Myth 2: Motor insurance only covers accidents due to third party’s fault
Truth: A comprehensive auto insurance policy, you can avail coverage for your vehicle in the event of mechanical faults/damages, theft, flood, terrorism, riots etc. However, your motor insurance policy cannot defend you in case wherein you drink and drive or if you are driving under the influence of drugs. Moreover, you should use your vehicle in a way that it complies with the guidelines mentioned under the policy document. For example, if you use your car for a business purpose and meet an accident, then you can’t make a claim for damages.
Myth 3: Not being able to transfer your insurance policy to another insurer for fear of losing No-Claim Bonus
Truth: No-Claim bonus is the accumulation of discount when the policyholder has ‘n’ number of claim-free years. It keeps on building up till the time claims are not made. If you transfer your auto insurance from one insurer to another, you can transfer your NCB as well, given that it is filed within 90 days from the expiry of the old policy.
Myth 4: A third party cover is enough if your car is old
Truth: A third party car insurance covers only damages caused to a third-party and not for the damages to your own car. It is therefore advised to take up a plan keeping in mind the present condition of the car and not its age.
Myth 5: No-Claim Bonus will automatically go to the new owner in case of selling of car
Truth: No-Claim Bonus is an asset for the person with an active motor insurance. It only has the owner’s rights on it. Regardless of which ever insurer you select for yourself, your NCB follows you and you can avail its complete benefit. Therefore, it is completely untrue that NCB gets transferred to another person once your sell the car.
Myth 6: Your motor insurance policy covers you for all damages caused by you
Truth: It generally covers most damages, but not all, especially if you get convicted of drinking and driving. In such a case, your insurance claim will get rejected.
Myth 7: I can’t change insurer once I buy one insurance plan from them
Truth: Insurance plans are generally valid for one or two years except for the multi-year plans. And, you can always change your insurer at the time of renewal with the full benefit of NCB earned by you from the previous insurer.
Myth 8: In case of an accident, you need to settle the entire gruelling claims process by your pocket
Truth: Your claim in such a case will be reimbursed, whether or not you pay the claim or not. Also, for online insurance, you can visit the network garage and the insurer will directly settle the incurred expense, therefore, no intervention is required. Later, if you can manage visiting a network garage, then you can claim a reimbursement
Frequently Asked Questions
- What are the documents required to be submitted for a car insurance claim?
The documents that you would generally require are:
a)A duly filled claim form
b)Registration Certificate (RC) copy of the vehicle
c)Original estimates of loss to the vehicle
d)Repair invoice and payment receipt
For theft claim, one would need to file an FIR with the local police and the copy of the same would be submitted to the concerned insurance company along with the keys to the vehicle and a non-traceable certificate.
- Is it mandatory to inform the insurance company if I fit a CNG/LPG in my vehicle?
To fit a CNG/LPG in your vehicle, you need to inform both the Road Transport Authority (RTA) where the vehicle’s registration is done and your insurance company as well. The RTA will make a note of the Registration Certificate (RC) and the insurance company will inform you regarding the payment of the extra premium for the value of the kit to be covered under the ‘OD’ and ‘TP’ sections respectively.
- Should I buy a Comprehensive car insurance or a Third-party insurance?
Third party insurance, also known as Liability Only or Act only cover, is mandatory by law for all vehicles plying on the roads. Third party insurance only covers damages caused to a third party individual or property, whereas Comprehensive covers both own damages as well as third party.
So, it is advisable to buy Comprehensive car insurance, but if you are too cost conscious then you may go for a third-party insurance.