Friday, October 24 2025
Source/Contribution by : NJ Publications

Owning a car is more than just a convenience-it is an investment and, for many, a dream fulfilled. But with this ownership comes responsibility, one of the most important being car insurance. As a car owner in India, understanding the nuances of your policy is crucial for your financial security and peace of mind.

Despite being mandatory in India under the Motor Vehicles Act, many car owners still view insurance as a burden or as something that doesn't add much value. This is largely because of the many myths and misconceptions that circulate around car insurance.

Let's debunk some of the most common myths and get to the truth about car insurance.

Myth 1: "I drive carefully, so I don't need car insurance."

This is perhaps the most dangerous myth of all. While being a cautious driver is commendable, It doesn't stop accidents from happening. Even if you're the safest driver on the road, you can't control the actions of others. A sudden lane change by another driver, a stray animal on the road, or a simple mechanical failure can lead to a collision. More importantly, car insurance isn't just about accidents. It also covers damages from natural disasters like floods and landslides, thunderstorms, and man-made incidents like riots, malicious damage and fire.

Furthermore, third-party liability insurance is legally mandatory in India under the Motor Vehicles Act, 1988.Driving without this basic coverage can lead to heavy penalties, suspension of your driving license and even imprisonment. Think of insurance as a safety net, not an expense. It's there to protect you from the financial fallout of an unforeseen event, saving you from potentially high repair costs or legal liabilities. It's an affordable annual premium that provides a huge shield against the unknown.

So, whether you drive carefully or not, insurance is a necessity, not a choice.

Myth 2: "Insurance companies apply a lot of deductions during a claim."

Many people believe that when you file a claim, the insurance company will find a way to reduce the payout to a very low amount. This isn't true. While there are deductions, they are often a standard part of the policy and are applied transparently.

The most common deduction is the depreciation on parts. Over time, the value of your car and its parts depreciates.An insurer won't pay the full cost for a part that has been in use for years. However, you can opt for a "zero depreciation" or "bumper-to-bumper" add-on cover. This special cover ensures that no depreciation is deducted from the cost of replacing plastic, fibre, or metal parts in case of a claim.

If you understand your policy and choose the right add-ons, you can significantly reduce or eliminate these deductions. Insurance provides financial support when you need it the most.

Myth 3: "It's only useful when the car is brand new."

Many believe that insuring an older vehicle doesn’t make sense because the market value is lower. While a new car has a higher market value and thus higher repair costs, older cars are also at risk.

Older cars are still at risk of accidents, theft, or damage from natural disasters. Repairing or replacing major parts can still cost a significant amount.Also, an older car might be more prone to mechanical issues, and while standard policies don't cover general wear and tear, they still protect against accidents, theft, or damage from fire. Moreover, third-party insurance is mandatory regardless of the car's age. Car insurance is about protecting your financial liability and your asset, no matter how old it is.

Myth 4: "A third-party policy is enough."

A third-party vehicle insurance policy is mandatory by law in India. It covers damages to a third person's property, or bodily injury or death to a third person caused by your car.However, it does not cover any damage to your own car.

For example, if your car is damaged in an accident, stolen, or destroyed in a flood, you won't receive any compensation under third-party insurance.

Also, If you're involved in an accident that's your fault, and your car is damaged, you will have to bear the entire cost of repairs yourself. This could run into lakhs of rupees for even a minor collision. A comprehensive policy, on the other hand, provides a much broader safety net.It includes third-party liability and also covers own-damage to your vehicle due to accidents, theft, fire, and natural disasters. While a third-party policy protects you from legal trouble, a comprehensive policy protects your wallet. The small increase in premium for a comprehensive policy is a small price to pay for the extensive protection and peace of mind it offers.

So, while a third-party policy keeps you legally compliant, only a comprehensive policy truly safeguards your investment.

Myth 5: "I can only buy from the car dealer, not from any broker or agent."

Many new car buyers assume they must purchase insurance through the dealer at the time of purchase. It's a myth, you have the right to choose your insurance provider. The dealer-offered policy might not always be the best or most cost-effective option for you.

You can purchase your policy from a wide range of sources, including insurance brokers, agents, etc;. Brokers and agents can also help you understand the finer details of policies, ensuring you make an informed choice. They will suggest more suitable add-ons (like zero depreciation, roadside assistance, or engine protection), and you can expect better service from your insurance advisor than the dealer.

Why It Matters

Falling for these myths can lead to under-insuring your car, unnecessary financial burdens, or even legal troubles. By understanding the truth about private car insurance, you not only protect your vehicle but also secure peace of mind.

Here are a few quick tips to keep in mind:

• Always read your policy document carefully.

• Opt for add-ons that suit your needs and driving conditions.

• Keep track of renewal dates to avoid policy lapses.

• Drive responsibly, but also stay prepared for the unexpected.

Conclusion

Car insurance is more than just a legal formality-it is a financial safety net and a critical part of responsible car ownership. Whether your car is brand new or a few years old, whether you drive carefully or face the chaos of Indian roads daily, the right insurance policy ensures you are protected against unforeseen losses.

Don't let myths cloud your judgment. Choose the right coverage, and enjoy peace of mind - knowing that both you & your car are safeguarded. After all, your car is not just a machine-it's your companion on countless journeys. Make sure it is protected the right way. Safe driving!