Car insurance is meant to protect you financially, but many car owners unknowingly make mistakes that reduce coverage or cause claim rejection. These errors often happen due to lack of awareness rather than intent.
This guide highlights the most common car insurance mistakes in India—and how to avoid them.
1. Choosing Insurance Only Based on Lowest Premium
A cheap policy may look attractive but often:
- Offers limited coverage
- Has high deductibles
- Excludes important protections
Always compare coverage details, not just price.
2. Skipping Important Add-Ons
Many buyers avoid add-ons to save money, but some are genuinely useful.
Commonly skipped but useful add-ons:
- Zero Depreciation (for new cars)
- Engine Protection (in flood-prone areas)
- Roadside Assistance
Choose add-ons based on usage and location, not trends.
3. Under-Declaring or Over-Declaring IDV
IDV (Insured Declared Value) affects both:
- Premium amount
- Claim payout
Mistakes include:
- Setting IDV too low to reduce premium
- Setting IDV unrealistically high
Always choose an accurate market value.
4. Forgetting to Renew Policy on Time
Driving with an expired policy can:
- Lead to traffic fines
- Cancel No Claim Bonus
- Require vehicle inspection before renewal
Set renewal reminders to avoid policy lapses.
5. Losing No Claim Bonus (NCB)
NCB is valuable and transferable.
Common NCB mistakes:
- Not transferring NCB when changing insurers
- Making small claims unnecessarily
- Not opting for NCB protection add-on
Preserve your NCB carefully.
6. Providing Incorrect Information
Incorrect details can cause claim rejection.
This includes:
- Wrong fuel type
- Incorrect car variant
- Undisclosed modifications
- Wrong city of registration
Always declare accurate vehicle and personal details.
7. Ignoring Policy Exclusions
Many claims are rejected because:
- Damage type is excluded
- Driving conditions violate policy terms
Examples:
- Driving without a valid license
- Driving under influence
- Commercial use of private vehicle
Reading exclusions is essential.
8. Not Checking Cashless Garage Network
Assuming all service centers are cashless is a mistake.
Always verify:
- Garage availability in your city
- Preferred workshops in the insurer’s network
This ensures smooth claim settlement.
9. Making Claims for Minor Repairs
Frequent small claims can:
- Increase renewal premium
- Cancel NCB benefits
Sometimes paying out-of-pocket is financially smarter.
10. Not Reviewing Policy Every Year
Car value, usage, and risk change over time.
Review your policy when:
- Your car ages
- You relocate to a new city
- Your driving frequency changes
Annual review helps maintain optimal coverage.
How to Avoid These Mistakes
- Compare policies beyond price
- Understand add-ons and exclusions
- Maintain correct documentation
- Renew policies before expiry
- Keep insurer informed of changes
Small checks can prevent big financial stress.
Final Thoughts
Car insurance mistakes often surface only during claims, when it’s too late. A little awareness at the buying and renewal stage ensures your insurance works when you need it most.
The right policy is one that balances:
- Legal compliance
- Practical coverage
- Reliable claim support
