Six Myths People Believe about the Auto Insurance Policy

Before buying best-suit insurance plan, one should understand the terms and information covered in the plan affecting the cost and coverage. Moreover, customers may have myths in their plan. So they should know the truth and fiction involved. A wisest consideration is to know these myths and the real facts:

Myth 1: The colour of the vehicle concludes the cost of auto insurance

The colour of the vehicle is not included in the factors determining the cost of the insurance. What does matter is the type of the car, model, engine size, the age of the vehicle, age of the policyholder, driving record and credit history.

Myth 2: Credit has no effect on Insurance rate

Customers’ credit-based insurance score matters. The reason to take this into consideration is to know how well a customer manages financial affairs. Insurance policy, renew of the plan, insurance coverage and record of claim comes in credit score. The people having good credit record end up paying small premium for insurance when insurance scores are factored into the pricing equation.

Myth 3: Insurance policy covers the policyholder if the car is lost, destroyed or damaged by falling tree fall, storm, flood, fire etc.

Customers should know that all the insurance policy is not covered the terms mentioned in this myth. These all will be in control, if the customer opts for comprehensive & collision coverage along with the standard liability coverage. Many insurers offer additional coverage, which can help you protect from various important factors. So, know all the plans before purchasing.

Myth 4: Customers need coverage of only the minimum auto liability insurance

According to the Insurance law in India, all vehicle owners should have minimum third party liability coverage. This is done to protect other persons, who suffer because of damage/loss done by the policyholder. But chances are that vehicle owner needs more insurance coverage than third party liability because accidents often cost more than the minimum limits. Getting minimum cover means to pay more out-of-pocket for losses incurred in an accident.

Myth 5: If person other than policyholder drive vehicle, their insurance also cover in case of accident 

Insurance offers coverage of the policyholder, not the person who is driving the vehicle. Make sure this from the insurance company while purchasing the insurance. Most of the insurers also offer coverage of policyholders’ driver.

Myth 6: Personal auto insurance gives coverage for both personal and business use of the vehicle

Personal auto insurance will not cover if you are using vehicle for business purpose. For this, one can opt for commercial auto insurance by keeping a good driving record.

Also read -> Factors Determine the Cost of Health Insurance