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Guide To Clear Misconceptions About Car Insurance

By Juhi Walia
27 September 2022, 11:35 AM

Car insurance policies cover all the losses due to:

  • Theft
  • Vandalism
  • Natural calamities
  • Other damages that happen in a car accident

They also protect you and your passengers in such situations. Purchasing car insurance is a straightforward procedure.

The process of renewing such vehicular insurance policies is even easier. These are all facts. However, some theories are prevalent in the market, which people mistake for facts. However, these misconceptions stem from:

  • A lesser understanding of the world of insurance policies
  • Their application procedure,
  • Appropriate usage and so on

One must understand the practical implications behind the need to bifurcate between facts and misconceptions. It will allow one to prepare better for their lives by better understanding the nitty-gritty aspects of their insurance policies. 

This comprehensive guide follows some notions in the market and embarks on the differences between various facts and misconceptions:

1. An Old Car Does Not Need Comprehensive Vehicular Insurance

This is a general notion in the market that an old car does not need comprehensive car insurance. This is just a myth and not a fact. If your old car is a classic, insurance is a must. If it is not, there shall be several considerations.

It should be based on comparing the valuation of the car and the premium rate. This is a misconception that shall be cleared using straightforward logic. 

2. Offline Vehicular Insurance is More Secure Than Online

It is a common misconception among older people that buying a policy from an agent or office is more secure. But this is not the case. The car insurance policy is more straightforward to buy online than offline.

It is a seamless procedure, and you get the same security from the comfort of your home. You get the same vehicular insurance policy offline and online. There is no change, and this misconception needs to be altered. 

3. You are Not Eligible for the No-claim Bonus if You Switch Your Insurance Provider

This is probably the most infamous theory that floats around. If you switch insurers at the time of renewal or during your policy tenure, you will lose the no-claim bonus you were otherwise eligible for.

This is not true at all. A no-claim bonus in car insurance is issued to a policyholder and not to the car. So, even when you change your insurance provider, if you are eligible for the no-claim bonus, you can legitimately claim it and will be subsequently provided with it. 

4. Safe Drivers Do Not Need Vehicular Insurance

This is another story that is not true. The number of cars on the road is increasing continuously. This means that even if you are a safe driver, the other person might not be one. So, you are always at risk of rough drivers.

Moreover, it is also mandatory by law to have third-party insurance; hence, even if you are an extremely safe driver, you will still need car insurance. 

5. If You Lose Your Car Completely, the Insurer Pays for a New Car

This is false. In case of a total loss of the car, the insured declared value (IDV) is calculated. This IDV includes the car's depreciation and market price before arriving at a valuation. So, the IDV of a vehicle is the maximum amount a company will pay for the car. In case of a return to invoice add-on cover, you will get the full invoice price, including depreciation, registration charges, insurance costs, etc.

Maybe there is no insurance provider or a clause in any insurance that would provide for the financial backup of a new car in case of total loss. However, a few insurers may provide the same; so check the fine print of the policy document thoroughly before concluding.

6. Vehicular Insurance Renewal Should Happen With the Same Company Only

This does not remain true much to the popular perceptions going around. Sometimes, some car insurance companies may provide such data in the market, so they don't lose customers. But this is not true at all. You can switch your policy even in the middle of the policy tenure.

There is no need to renew your policy with the same company. If you find a more customizable policy that is more suitable for your car at the time of the renewal, you can easily choose that. There is no compulsion to continue with the same insurance provider.

8. Third-party Cover is Enough for My Old Car

For an old car, the chances of damage and loss in times of a road accident are very heavy. The cost of these damages is the primary reason you should have comprehensive insurance for your old car instead of simple third-party car insurance. Your car's age determines decides greatly the coverage for the same.

9. I Should Have a Separate Policy for My Driver

This is not true. You can have a separate policy, but it is no compulsion. It is not the most efficient solution either.

This means that you can add your driver to your ongoing car insurance policy. The only thing you will need for this is that your driver must have a driving licence

10. When an Accident Happens, I Will Have to Pay from My Pocket First and Then Go Through a Complex Claim Process

This is a prevalent misconception people have. This is not true because even if you pay or do not pay at the time of the accident, your car insurance provider will pay for it.

Moreover, you do not need to wait for the claim to pass. With the online claim process, you can get a quick and easy car insurance claim disbursed for your car. You can choose from the wide range of garages and hospitals your insurance provider offers.

Key Takeaways

Before believing the common word of mouth, it is more advisable to read the conditions of the policy. If you are unsure how to do that, you can find comprehensive guides and contact your car insurance provider for better information.

Read more -


1. Is the car insurance claim process very complex?

No. The claim process is not as complex as it is made out to be. With online policy, it is easier to handle claims.

2. Will my vehicle insurance cover all damages that I make?

Not necessarily. Your car insurance will not provide for any damages if you are found drinking while driving.

3. Will my NCB be transferred once I sell the car?

No, the NCB is associated with the policyholder, not the car, so it won't be transferred to the new owner.

4. Can I change my insurer in the mid-policy?

Yes. Suppose you find a better insurance provider with a more customisable and suitable policy for your car. In that case, you can switch to the new insurance provider in the middle of your policy.

5. I have heard that having third-party insurance is enough. Why should I buy comprehensive vehicular Insurance?

Comprehensive car insurance will provide for the loss and damages that happen to you, your car, or your passengers in an unfortunate situation. In contrast, third-party insurance will only cover the third party.

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