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13 Facts and Myths About GAP Insurance Every First-Time Vehicle Owner Should Know

Any first-time vehicle insurance buyer would have received a lot of advice on what kind of insurance to obtain, where to get it, and who to buy it from. Even so, it is bewildering how much misleading advice is still out there.

Although advice and critique are valuable, nothing beats a personal reality check. Reports and Data estimate that the car insurance market will grow significantly over 2021-2028.

Therefore it is quite important that facts and myths about car insurance are out there so that vehicle owners don’t make costly mistakes.

The following is a list of common misunderstandings that have been debunked by facts to help you overcome your erroneous beliefs and make an informed decision when obtaining vehicle insurance.

MYTH 1: Premiums are affected by the colour of your car

FACT: It is not

This is an urban legend that is neither true nor significant. Premiums are established by the vehicle’s configuration, engine capacity, and body; the colour of the car has no bearing. As a result, even if it means paying a greater price, don’t be scared to get a car in your favourite colour.

MYTH 2: You save money by lowering your insurance coverage.

FACT: It is just the opposite

In contrast, you end up spending more money due to the limited services that come with a lower coverage package. Accidents can occur at any time, and if your insurance coverage is insufficient, you will be responsible for the repair costs. As a result, if you want to get the most out of your insurance, go for a higher-cost plan with more coverage.

You May Read: How to Choose a Perfect Car Insurance Policy for a Road Trip?

MYTH 3: Your car insurance will take care of everything.

FACT: There is a limit to what is covered under insurance

Your car insurance, contrary to popular assumption, only covers a portion of the damage to your vehicle. It has limitations, and you may be asked to pay the first payment in cash before your insurance carrier would cover the rest. This is known as a deductible, and different insurance companies have different amounts for it.

MYTH 4: An old car does not require auto insurance.

FACT: It is required by law.

Even if your car is ancient, you must have at least third-party liability insurance. You can choose any sort of policy and must insure your vehicle, depending on your usage or budget. Without valid auto insurance, your ancient car would not be able to drive on Indian roads.

MYTH 5: You can’t switch insurance companies.

Source: https://www.reportsanddata.com/report-detail/gap-insurance-market

FACT: It’s simple to modify.

Many individuals still assume that once you get a car insurance policy from a particular company, you can’t change it. A policyholder’s coverage can easily be transferred from one insurance provider to another. In the event that you are dissatisfied with your existing insurance company, compare and select the best one.

MYTH 6: If you switch insurance companies, you’ll lose your NCB discounts.

FACT: Your NCB follows you around.

Your no-claim bonus will not be wiped off if you switch vehicle insurance companies. NCB savings are still available to you, and you can transfer your NCB along with your coverage to your new insurance carrier. The caveat is that you must transfer your NCB to a different insurance carrier within 90 days of the expiration of your current policy.

You May Read: Why Subcontractors Need Public Liability Insurance?

MYTH 7: Insurance coverage is only provided in the event of an accident.

FACT: Car insurance has a considerably broader range of coverage.

Car insurance covers the policyholder not only in the event of an accident, but also in the event of natural catastrophes, man-made disasters, theft, fire, and other mishaps.

MYTH 8: If my automobile is damaged, I will receive the full claim amount, which is equal to the car’s on-road price.

FACT: This is incorrect. The procedure for filing a claim differs.

Your final claim settlement amount will be calculated using your vehicle’s current IDV rather than the actual on-road pricing. When computing the overall value of the loss, the depreciation cost (if depreciation cover was not chosen) will be removed.

MYTH 9: You can’t change the duration of your vehicle insurance policy.

FACT: The policyholder can adjust the duration of his policy depending on their needs.

A multi-year policyholder, for example, can switch to a single-year insurance and vice versa. However, because many insurance firms do not allow it in the middle of a running policy, the policyholder can do so when renewing his coverage.

MYTH 10: It’s not necessary to renew your car insurance if it’s already expired or lapsed.

FACT: Before your auto insurance coverage expires, make sure you renew it.

It is a legal requirement for car owners to have a valid insurance policy. And, in order to do so, you should renew your insurance before it expires or lapses. Because driving without a proper vehicle insurance policy is a crime.

You May Read: Make the Most Out of Your Next Road Trip

MYTH 11: Because my car is new, I need to pay a higher premium.

FACT: The premium is determined not just by age, but also by manufacture, model, and cubic capacity. 

People have this preconceived impression that the premium for a new car will be really significant. The cost of car insurance is determined by a variety of factors. Your premium is determined by the manufacturer, model, cubic capacity, anti-theft gadgets installed, policy type, and other factors. For example, due of their price, a new Hyundai Grand i10 would have a lower premium than a new Hyundai Creta/Maruti Suzuki Brezza.

MYTH 12: Because I am a competent driver, I do not require auto insurance.

FACT: Regardless matter how good of a driver you are, you must purchase vehicle insurance.

Even if you drive safely, the Motor Vehicles Act of 1988 mandates that you have auto insurance (at least a third party). Uncertainties might strike at any time in one’s life. As a result, be a responsible citizen, as having auto insurance will not only protect you financially, but it will also safeguard others from mishaps. You might be a good driver but accidents can occur due the bad driving skills of others.

MYTH 13: I can’t file an accident claim because the car wasn’t driven by me.

FACT: You can file a claim as long as your automobile is insured and someone is driving it with a valid driver’s licence.

This is also one of the most widely held beliefs. Even if the policyholder is not driving his automobile, he can file a claim. The driver, on the other hand, must have a valid driver’s licence and your vehicle must be insured.

You May Read: What Type of Auto Insurance Do You Actually Need

Paroma Bhattacharya

Paroma Bhattacharya has dabbled in the realm of content production for over half a decade and possesses extensive experience in penning down pieces related to healthcare, technology, banking, and a wide range of other industry verticals. Her articles focus primarily on balancing relevant data while never neglecting to make the material engaging. She believes in providing objective facts to help people make important business decisions.

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