There generally exists a fair amount of ignorance and misguided conceptions about insurance as a whole, but car insurance suffers the most from these symptoms. People spend a lot of time researching about the make, model, capacity, and after-sales service of a car, but rarely is the same amount of energy put in when purchasing car insurance.
Even after being insured, there’s still a lot of misconception about how car insurance works. As a result, in times of need, it hinders your ability to make a well-thought-out decision, which can ultimately cost you a lot of headaches and financial heartburn.
Clarifications on Car insurance
So, in order to clear the air and help you understand how exactly car insurance works, we’re listing some of the common misconceptions and the reality about them.
Myth #1: Aged cars do not need car insurance
Car insurance works and is needed, irrespective of the age of the car. It’s mandated by the Indian Motor Vehicle Act, 1961 and as a result, every car must at least have a third-party liability. However, that shouldn’t mean that it’s ideal to have only a basic insurance. Cars can get damaged or run into repairs irrespective of age and, as such, should always be insured to save you from being financially rundown.
Myth #2: Insurance does not cover accidents caused due to the owner
The cause of the accident has no real bearing on the insurance. Whether it’s due to natural calamities or a road rash accident, insurance provides coverage for third-party liabilities and damage to the car irrespective of the cause. However, insurance providers strictly reject cases where the accident or damage was caused by an intoxicated driver.
Myth #3: Transferring policy to another provider will nullify No Claims Bonus
Typically, a motor insurance policy has a one year or two-year tenure. As such, you’re free to find a new insurance company after the policy lapses. It’s advisable to purchase your new policy as soon as possible, since you don’t want to be driving uninsured.
No Claims Bonus (NCB) is a reward provided by companies where there have been no claims in the preceding years of coverage. In case you have transferred or would like to transfer your policy to another provider, you’re free to do so and the NCB will be transferred to the new provider. Customers have a 90-day period after a policy lapses to renew or purchase a new policy for the NCB to be still active.
Myth #4: Basic third-party coverage is enough
While third-party coverage is an essential part of car insurance, it’s certainly not enough. It provides financial protection for compensation to third-parties in case of an accident or damage but does not provide coverage for car repair costs and personal accidents. As such, a comprehensive package should always be the first choice.
Myth #5: Separate insurance policy needed for driver
While there are some policies which do not pay for the claim if the car was being driven by a third-party, it certainly isn’t a general practice. In fact, most policies will cover the driver if he/she is named in the policy. The driver would require a valid driver’s license, without which no claim would be permissible.
Myth #6: No cashless facility in car insurance
Every insurance company has their own panel of approved network garages which can repair your car free of charge on a cashless basis. Reimbursement claims are needed, only if you want to have your car repaired from a non-network garage.
Explanation of Why Car insurance Is Important
As you see, there is a lot about car insurance which we generally assume, but not everything is true. This extends from the fact that there isn’t enough attention paid to car insurance and its working. Alternatively, car insurance helps provide financial protection for the car, any third party (passenger, pedestrian, third-party driver), and the owner in case there’s any contingency.
It can help save your hard earned money from being wasted on car repairs, treatment costs, or compensation to third-parties. To make your decision easier, try using online sites like Coverfox.com to compare features and quotes. Your insurance policy should never be a bare-basic third-party liability policy, just to comply with legal regulations, but carefully chosen to suit your needs.