Auto insurance provides protection to the owner against any damages on the vehicle or for repairs due to an accident and also pays for any Third Party Liability.
In India, the owner of the vehicle will be liable for any injury or damage caused to the third party life or property caused by an accident.
And driving any vehicle without insurance in a public place is an offence which is punishable.
Here are few common insurance myths busted.
1 Myth: Higher premium on New Cars
This is a very common myth that one needs to shed. Whereas, premiums are higher on old cars when compared to new cars.
This is because, replacement of old car parts are difficult and one needs to shell a higher amount to get a particular part. Old cars are vulnerable to frequent damage and repairs.
2 Myth: Red color attracts higher rates
Colour of the car has nothing to do with premium rates charged. Car insurance premium depend on the age of the vehicle.
3 Myth: CIBIL Scores does not impact Insurance rates
Till few years, back CIBIL score was not at all necessary in India. But now your credit score plays a vital part in your insurance rates.
Lower the creditworthiness higher can be the rates. So, be carefull any delay in payments like credit card repayments, mortgage loans, EMIs, utility bills will impact on the credit score which may vary your insurance rates.
4 Myth: Insurance covers everything
May be not. Insurance will not take care of the expenses in certain conditions when a vehicle owner is not having a valid Driving License, when he is under influence of intoxicating liquor or drugs or when vehicle is used for unlawful purposes.
5 Myth: Does not cover " Act of God"
Most of the insurance companies cover earthquake, flood, storm, cyclone, hurricane, inundation, hailstorm, frost and landslide.
6 Myths: Insurance cannot be transferred
The insurance can be transferred to the buyer of the vehicle, provided the seller informs in writing of such transfer to the insurance company along with filled form. There will be a nominal fee charged on the transfer.