Busting the Top 5 Myths About Car Insurance in India
Written by Upstox Desk
5 min read | Updated on July 21, 2025, 16:28 IST
Quick Preview: Common Myths and Corresponding Realities
Myth#1: Third-Party Insurance Is All You Need
Myth #2: Comprehensive Insurance Covers Everything
Myth #3: Claims Process Is Always Tedious and Slow
Myth #4: Car Insurance Premiums Can’t Be Reduced
Myth #5: You Should Stick to the Same Insurer Forever
Honourable Mentions: More Myths You Shouldn’t Fall For
Summing up
FAQs
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Myths are fictional stories told in such a convincing manner that people often find them profound and believe every word. Not to sound racist or typecast, but Indians are very good at creating and believing in myths. So much so that even modern-era topics, such as car insurance, are full of numerous myths that are often reiterated.
Car insurance is more than just a legal formality. It is a critical financial planning tool often ignored due to the myths surrounding the industry. Let us talk about the most common myths about car insurance in India and how it can affect your informed decision-making.
Quick Preview: Common Myths and Corresponding Realities
| Myth | Reality |
|---|---|
| Third-party insurance is all you need | It won’t cover damage to your own car |
| Comprehensive insurance covers everything | It has exclusions: you need add-ons for full protection |
| The claims process is always slow and frustrating | Digital insurers now offer instant, cashless, app-based claims |
| Premiums can’t be reduced | NCB, deductibles, and smart driving can lower your premium significantly |
| You should stick to the same insurer forever | Switching can save you money and offer better benefits |
Let us evaluate each of the myths and the realities one by one. At the end of the list, you will get a few ‘honourable mentions’; a list that includes some popular myths, debunked.
Myth#1: Third-Party Insurance Is All You Need
You might have heard your uncle suggest that third-party insurance is all you need for your car. It is the legal requirement and the cheapest option. However, with just third-party insurance, your car remains unprotected, be it from a collision, natural disaster, theft, or vandalism. Imagine being in an accident and having to foot the entire repair bill yourself.
Myth #2: Comprehensive Insurance Covers Everything
No it does not, even though the name suggests so. Here are a few things that are not automatically covered under comprehensive insurance, unless you opt for an add-on:
-
Engine or gearbox damage due to waterlogging: Go for an engine protection add-on
-
Normal wear and tear (like tyres and batteries): Go for a tyre protection add-on
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Depreciation on parts replaced during repairs: Go for a zero-depreciation add-on
-
Damage from driving under the influence or without a license: Never covered
Myth #3: Claims Process Is Always Tedious and Slow
Conventionally, the processes were tedious and slow due to inspection requirements, slow communication, and an overall lack of digitalisation in the sector. However, things have changed rather drastically in the past couple of years.
Today, most insurers offer digital-first, hassle-free claim experiences. From app-based claim intimation and video inspections to real-time tracking and cashless garage networks, the process is becoming faster and more transparent.
Myth #4: Car Insurance Premiums Can’t Be Reduced
People often buy the argument that the insurance company fixes car insurance premiums, and there is nothing one can do to reduce them. However, you can legally and smartly lower the premium payable by trying out the following:
No Claim Bonus (NCB)
If you haven’t raised a claim during the policy year, you can get up to a 50% discount over time.
Voluntary Deductibles
Agreeing to pay a portion of the repair cost reduces your premium.
Installing Anti-Theft Devices
Certified devices can get you a discount.
Safe Driving
Fewer accidents mean a better track record, which can help during renewals.
Myth #5: You Should Stick to the Same Insurer Forever
Even though loyalty might sound like a safe route, you might be offered different attractive rates and discounts during car insurance renewals. Always try to compare quotes by using platforms like Upstox so that you have the best alternatives. Your No Claim Bonus (NCB) is transferable, so you never really lose the reward for safe driving.
Honourable Mentions: More Myths You Shouldn’t Fall For
Besides these most common myths surrounding car insurance, here are some other incorrect pieces of information that you should not trust:
| Myth | Reality |
|---|---|
| Good drivers don’t need insurance | Everyone needs motor insurance, and it is a legal requirement |
| Insurance is only for accidents | It also covers theft, natural disasters, vandalism, and third-party damages |
| IDV doesn’t matter much | Lower IDV = lower premium, but also lower claim payout |
| The initial response of an insurer is to reject a claim | Proper documentation and honesty usually lead to successful settlements |
Summing up
Do not make the mistake of considering your car insurance as a compliance requirement only. It is a comprehensive tool that gives you adequate coverage, especially during critical situations and mishaps. Unlike term or health insurance, which are subject to solicitation, car insurance is mandatory per the MV Act.
By avoiding all the myths surrounding car insurance, you can end up making an informed decision while buying or renewing motor insurance.
FAQs
Is third-party insurance enough to drive legally in India?
Yes, but it doesn’t cover your own vehicle’s damage or theft.
Can I reduce my car insurance premium legally?
Yes, via No Claim Bonus (NCB), voluntary deductibles, and anti-theft devices.
Is it easy to switch car insurance providers during renewal?
Absolutely. You can compare policies online and retain your NCB.
Do I need add-ons with a comprehensive policy?
Yes, add-ons like zero depreciation and engine protection are often necessary for full protection.
About Author
Upstox Desk
Upstox Desk
Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.
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