Car Insurance Myths Debunked: Things You Need to Know

For many people, the chances of something bad happening on the road may seem low, making car insurance feel like an unnecessary expense. However, skipping car insurance can lead to unexpected and significant financial losses in the event of an accident, theft, or damage to your vehicle.

Misunderstandings about premium calculations and claim processes are common, and these car insurance myths often cause confusion. As a result, many people miss out on maximising the benefits their policies offer. By understanding the facts and debunking these misconceptions, you can make smarter decisions and potentially save a lot of money.

Let’s explore some of the most common car insurance myths and set the record straight.
 

Myth: A Third-Party Insurance is Enough

By law, third-party motor insurance is mandatory for all vehicles in India. Many believe a third-party car insurance policy provides sufficient coverage for all potential liabilities.
 

Reality: A third-party insurance only covers damages to other cars and their owners/drivers involved in an accident. It does not cover your vehicle’s repair or replacement costs. Comprehensive insurance may be more expensive, but it protects your car and you better in case of an accident.
 

Myth: Old Cars Don't Need Insurance

Some people only have third-party insurance for older cars, believing they do not require comprehensive insurance since their value has depreciated.
 

Reality: Legally, all vehicles must have at least third-party insurance - so paying more for comprehensive insurance may make more financial sense in the short term. But, even for older cars, comprehensive coverage can save significant costs in case of accidents or theft.
 

Myth: Comprehensive Insurance Covers Everything

A comprehensive car insurance policy covers all kinds of damages or losses.
 

Reality: Comprehensive policies exclude regular wear and tear, mechanical failures, and damages caused by illegal activities. Add-ons may be required for extra coverage. You should read the policy document properly, even for comprehensive car insurance.
 

Myth: Insurance Claims are Tedious and Time-Consuming

Some people can feel anxious after an accident because they believe that filing and processing insurance claims is frustrating and lengthy.
 

Reality: With modern digital tools, insurers now provide quick and efficient claim settlements, often resolving claims within a few days. Customer service is vital for insurance companies to retain business, so many have made their processes as stress-free for the customer as possible.
 

Myth: Add-ons are Unnecessary Expenses

Add-ons to insurance policies are costly and provide little value.
 

Reality: Add-ons like zero depreciation, NCB protection, return-to-invoice cover, roadside assistance, and engine protection can offer crucial support in emergencies and reduce out-of-pocket expenses. Read the policy document to learn what add-ons an insurance provider offers and which make sense for your car. Additionally, if you add expensive accessories to your vehicle, you can have the insurance provider include them into the policy and value of the car for an additional fee.
 

Myth: Minor Repairs Aren't Covered by Insurance

Car insurance policies don’t cover minor damages or repairs.
 

Reality: Comprehensive insurance can cover minor damages, but filing a claim might affect your No-Claim Bonus (NCB). You can take a call on whether to make such claims after consulting the insurance company’s customer support.

Myth: You Can't Change Insurers Mid-Policy

Many believe that once a car insurance policy is purchased, it cannot be transferred to another insurance company. Insurance policy providers can only be changed when renewing the policy for the following year.
 

Reality: You can switch insurers at any time during the coverage period. This may afford you better benefits, offer better add-ons and lower premiums.
 

Myth: Car Insurance Doesn't Cover Damage from Rat Bites

Some believe car insurance policies do not cover damages caused by animal bites, such as rats chewing vehicle wires.
 

Reality: Rat bites are a common problem, and they are usually covered by comprehensive car insurance. The insurance may also cover other kinds of damages due to accidents involving animals, so you must check and understand the details of the specific insurance policy.

Myth: If You Caused an Accident, the Insurance Doesn’t Pay for Damages

After an accident, people believe they have to prove they did nothing wrong to receive the benefits their car insurance policy promised.
 

Reality: Comprehensive insurance covers damages to your car even if you’re responsible for the accident. However, insurance policies will not cover damages incurred if the driver was involved in illegal activities such as driving under the influence of alcohol or street racing, for example.
 

Myth: The No-Claim Bonus on My Car’s Insurance can be transferred to the New Owner

When selling a car, the No-Claim Bonus (NCB) is transferred to the new owner along with the insurance.
 

Reality: The NCB is tied to the policyholder, not the vehicle. The seller can transfer the no-claim bonus to the insurance policy of their next car, and the buyer can also transfer their NCB to their new purchase. 
 

Myth: Always Choose the Insurance with the Lowest Premium

The cheapest policy is always the best option.
 

Reality: Low premiums often come with limited coverage. Evaluating the car insurance policy's features, add-ons, and claim settlement reputation is crucial to making the right choice.
 

Conclusion

Car insurance is more than just a legal requirement; it’s a financial safety net that can save you from significant losses. As we’ve seen, common myths—like assuming third-party insurance is enough, believing old cars don’t need insurance, or thinking comprehensive policies cover everything—can lead to uninformed decisions. Similarly, misconceptions about tedious claims processes, the value of add-ons, and transferable No-Claim Bonuses highlight the need for a clearer understanding of insurance policies.

To make the most of your car insurance, take the time to read your policy document carefully and understand its inclusions, exclusions, and add-ons. Avoid falling for low premiums at the cost of inadequate coverage. When in doubt, consult experts or your insurance provider to clarify any questions. A well-informed decision ensures you’re fully protected on the road.