Car insurance myths can cost you thousands by causing claim rejection, higher premiums, and out-of-pocket repair bills. Many drivers believe they are fully protected, but their policy says otherwise. The biggest losses happen because of wrong assumptions about coverage, claims, add-ons, and renewals. This beginner-friendly guide clears those myths fast and helps you avoid expensive car insurance mistakes. Everything below is written to give you clarity, confidence, and real value from the very first scroll.
Why Car Insurance Myths Are More Dangerous Than You Think
Car insurance is not confusing by nature—misinformation makes it confusing. Most vehicle owners buy a policy once a year and forget about it. They trust agents, friends, or online comments without verifying facts. When an accident happens, reality hits hard.
Car insurance myths survive because:
- Policy documents are rarely read.
- Claims happen unexpectedly.
- Small misunderstandings feel harmless.
- Marketing language sounds reassuring.
The problem is simple: insurance only helps when you understand how it works. Otherwise, it becomes a false sense of security. This guide is designed to replace auto insurance myths with practical car insurance facts, explained in super easy language.
How Car Insurance Actually Works (Simple Explanation)
Before breaking myths, it’s important to understand the structure of vehicle insurance coverage.
Most policies include:
- Third-party cover (mandatory by law).
- Own-damage cover (optional but important).
- Add-ons (custom protection).
Third-party insurance protects you from legal liability if you injure someone or damage their property. Comprehensive insurance adds protection for your own car. Add-ons fill the gaps that standard coverage leaves behind.
Most insurance coverage mistakes happen when people mix these layers or assume one includes the other.
Myth 1: Third-Party Insurance Covers Your Own Car Damage
This is one of the most common third party insurance myths.
Third-party insurance only pays for:
- Injury or death of another person.
- Damage to someone else’s property.
It does not pay for:
- Your car repairs
- Theft of your car
- Fire or flood damage to your car.
Many drivers choose third-party insurance to save money, assuming accidents are rare. But even a small accident can cost more than years of premium savings.
The car insurance truth is simple: third-party insurance protects others, not you.
Myth 2: Cheap Car Insurance Is Always the Smart Choice
Cheap car insurance myths focus only on premium amount.
A low premium often means:
- Limited coverage
- Higher deductibles
- Fewer cashless garages
- Strict claim conditions.
This leads to insurance claim mistakes later. People realize the problem only when they file a claim and face deductions or delays.
The smarter approach is value-based selection. Look at coverage, claim service, and add-ons before price. Paying slightly more upfront often reduces long-term car insurance costs.
Myth 3: Filing a Small Claim Does Not Matter
This myth directly affects your No Claim Bonus.
Every claim you file can:
- Reduce your NCB
- Increase next year’s premium
- Cancel accumulated discounts.
No claim bonus myths make drivers believe small claims are harmless. In reality, frequent small claims can cost more over time than paying repairs yourself.
A practical rule:
- Pay minor repairs yourself.
- Use insurance for major losses only.
This strategy protects your NCB and lowers future premiums.
Myth 4: Insurance Covers Every Type of Damage
This belief leads to many insurance claim myths.
Insurance does not cover everything. Common exclusions include:
- Driving under alcohol influence.
- Driving without a valid license.
- Mechanical failure not caused by an accident.
- Consequential engine damage.
Engine protection insurance myths are especially costly. Flood-related engine damage is often excluded unless you have a specific add-on.
Always read exclusions carefully. Assuming coverage without checking is one of the biggest car insurance policy mistakes.
Myth 5: Zero Depreciation Add-On Is a Waste of Money
Zero depreciation insurance myths are very common among new car owners.
Without zero depreciation:
- Plastic and rubber parts are depreciated.
- Insurer pays less during claims.
- You pay more from your pocket.
With zero depreciation:
- Depreciation is not deducted.
- Claim payout is higher.
- Repair costs reduce significantly.
This add-on is especially useful for:
- New cars
- City driving
- High traffic conditions.
The small extra premium often saves thousands during a single claim.
Myth 6: Online Car Insurance Is Risky or Fake
Online car insurance myths exist because people equate paperwork with safety.
Online policies issued by licensed insurers are:
- Fully legal
- Regulated
- Valid across India
In many cases, online policies offer:
- Lower premiums
- Faster renewals
- Easy document access.
The risk is not online buying. The risk is buying without understanding coverage.
Myth 7: Older Cars Do Not Need Insurance
This is one of the most dangerous vehicle insurance myths.
Even an old car can:
- Injure someone
- Damage property
- Create legal liability.
Car insurance myths in India often make owners of old cars skip renewal. This leads to fines, legal trouble, and personal liability.
Why Car Technology Is Changing Faster Than Buyers — The Hidden Truth Behind Smart Cars & AI DrivingAt minimum, maintain active third-party insurance. It protects you from legal and financial disasters.
Myth 8: Add-Ons Are Just Sales Tricks
Car insurance add on myths ignore real-world risks.
Add-ons exist to protect against specific situations:
- Engine protection for floods.
- Roadside assistance for breakdowns.
- Return to invoice for total loss.
Not every add-on is necessary, but skipping all of them is risky. Choose add-ons based on how and where you drive.
The goal is targeted protection, not maximum add-ons.
Myth 9: You Can Renew Insurance Anytime After Expiry
Car insurance renewal myths cause benefit loss.
If your policy expires:
- NCB may reset
- Inspection may be required.
- Claims can be rejected.
- Coverage gap occurs.
Even a one-day delay can create complications. Always renew before expiry and review coverage annually.
Myth 10: All Insurance Companies Settle Claims the Same Way
This myth leads to poor experiences during claims.
Insurers differ in:
- Claim settlement speed.
- Documentation requirements.
- Surveyor coordination.
- Customer support.
Car insurance claim settlement quality matters more than premium savings. A cheap policy with poor service often costs more in stress and delays.
Always evaluate claim service reputation before buying.
Why Car Insurance Claim Rejection Happens
Most claim rejections happen due to:
- Policy exclusions
- Late intimation
- Incomplete documents.
- Unauthorized repairs
- Incorrect information.
Understanding the car insurance claim process reduces rejection risk. Preparation matters more than luck.
Step-by-Step Car Insurance Claim Process (Beginner Friendly)
- Inform insurer immediately.
- Register claim with accurate details.
- Submit required documents.
- Allow surveyor inspection.
- Repair at network garage.
- Track claim status.
Following this process avoids insurance coverage mistakes and speeds up settlement.
Car Insurance Facts Every Driver Should Know
Some simple car insurance facts can prevent big losses:
- Premium depends on risk, not color.
- Claims affect future premiums.
- Add-ons fill real coverage gaps.
- Reading policy wording is essential.
These facts replace confusion with confidence.
Car Insurance Premium Myths Explained Simply
Premiums do not increase randomly. They are affected by:
- Claims history
- Vehicle value
- Location
- Coverage type
Understanding this helps you control long-term costs instead of blaming insurers.
Insurance Claim Rules in India You Must Follow
Insurance claim rules India include:
- Mandatory third-party insurance
- Timely claim intimation
- Valid driving license
- Active policy during incident
Ignoring these rules can invalidate claims, even if the accident is genuine.
How to Choose the Right Policy Without Falling for Myths
Use this checklist:
- Match coverage with usage
- Avoid unnecessary claims
- Choose relevant add-ons
- Review exclusions yearly
- Renew before expiry.
This approach eliminates most car insurance mistakes.
Why These Myths Continue to Spread
Car insurance myths spread because:
- Insurance feels complex
- People rely on others’ experiences
- Claims are rare events
- Marketing simplifies reality.
Education breaks this cycle. Awareness saves money.
Software Updates Are Becoming More Important.
Conclusion: Know the Truth Before It Costs You
Car insurance myths are expensive beliefs. They lead to rejected claims, higher premiums, and financial stress. When you understand coverage, claims, renewals, and add-ons, insurance becomes a safety net instead of a gamble. Read your policy, question assumptions, and choose protection based on facts. That is how you save thousands and stay protected.
FAQs
Are car insurance myths common among new drivers?
Yes, beginners often rely on hearsay instead of policy terms.
Can a claim be rejected even with active insurance?
Yes, exclusions and rule violations can cause rejection.
Is zero depreciation useful for old cars?
It is more useful for new cars but can help older cars too.
Is online insurance valid in India?
Yes, if purchased from a licensed insurer.
Does filing one claim remove all NCB?
It usually reduces or resets NCB depending on policy terms.
Can I change add-ons during renewal?
Yes, renewal is the best time to update add-ons.
What is the biggest insurance coverage mistake?
Assuming coverage without reading exclusions.
How often should I review my policy?
At least once a year, before renewal.
Aditya Misra is a car and bike lover who enjoys everything about automobiles. He has a lot of experience with both new and old vehicles and loves sharing his knowledge and excitement. From trying out the latest models to fixing up classic bikes, Aditya’s writing is full of helpful tips and fun stories for anyone who loves cars and bikes.
