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Buying car insurance is one of the most important financial decisions for any vehicle owner. It not only protects you from financial losses due to accidents, theft, or natural calamities but also ensures that you comply with the law. However, many people end up making costly mistakes while purchasing car insurance—either due to lack of knowledge or by simply focusing on the wrong priorities. To help you make a smart and informed decision, here are the top mistakes you should avoid when buying car insurance.
1. Choosing the Cheapest Policy Without Checking Coverage
One of the biggest mistakes people make is selecting the cheapest car insurance policy available. While saving money upfront may seem appealing, a low-cost policy often comes with minimal coverage. In the event of an accident, you might find yourself paying a large portion of the expenses out of pocket.
Instead of focusing only on price, always compare the features and benefits of each policy. Look for coverage that provides adequate protection for your car’s value, your driving habits, and your financial situation.
2. Not Understanding the Different Types of Coverage
Many car owners buy insurance without fully understanding the difference between third-party liability insurance, own damage insurance, and comprehensive insurance. Third-party liability insurance is mandatory in India and covers damages to another person or property caused by your vehicle. Own damage insurance covers losses to your vehicle due to accidents, theft, or natural disasters. Comprehensive insurance combines both and provides all-round protection.Not knowing the difference can lead you to choose inadequate coverage. If you want complete peace of mind, a comprehensive plan is usually the smarter choice.
3. Ignoring Add-On Covers
Add-ons, also known as riders, enhance your car insurance coverage for a small extra premium. Common add-ons include zero depreciation cover, engine protection, roadside assistance, and return-to-invoice cover.
Many buyers skip these add-ons thinking they are unnecessary, but they can be a financial lifesaver during claims. For example, a zero-depreciation add-on ensures that you receive the full claim amount without deductions for depreciation on parts. Always assess your car’s age, usage, and local conditions before deciding which add-ons to include.
4. Not Comparing Policies from Multiple Insurers
With so many insurers in the market, prices and benefits can vary significantly. Some people simply buy from the first insurer they find or renew with the same company without comparison. This often means missing out on better coverage or lower premiums elsewhere. Use trusted online platforms to compare policies based on premium, coverage, claim settlement ratio, and customer reviews. A little research can help you find a policy that offers better value for money.
5. Providing Incorrect or Incomplete Information
While filling out the insurance application form, always ensure that the details you provide—such as vehicle information, previous claims, or modifications—are accurate. Giving false or incomplete information may result in claim rejection later..Insurance companies verify all information at the time of a claim. Even a small discrepancy can delay the claim process or lead to outright denial. Transparency always pays off in the long run.
6. Ignoring the No Claim Bonus (NCB)
The No Claim Bonus (NCB) is a reward given to policyholders who do not make any claims during a policy year. It can significantly reduce your premium—up to 50% over several claim-free years.
Many people forget to transfer their NCB when switching insurers or renewing policies. Always check your NCB eligibility and ensure it is carried forward to your new policy to maximize savings.
7. Not Reading the Policy Document Carefully
It’s easy to skip the fine print, but this is where all the crucial details—like exclusions, terms, and conditions—are mentioned. Not understanding what is covered (and what’s not) can lead to unpleasant surprises during claims.
Always take time to go through your policy document carefully. If any terms are unclear, ask your insurer or agent for clarification before finalizing your purchase.
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Conclusion
Car insurance is not just a legal requirement—it’s a shield that protects you from unexpected financial setbacks. By avoiding these common mistakes—such as choosing the cheapest policy, skipping add-ons, or ignoring your NCB—you can ensure that your insurance truly serves its purpose. Always compare, read, and understand before you buy. A well-chosen car insurance policy gives you peace of mind, knowing that you and your vehicle are well protected on every journey.