Buying car insurance feels simple – just pay the premium and relax, right?
WRONG. In 2025, more than 68% of Indian car owners are losing ₹50,000–₹3 lakh at claim time because of silly mistakes. This ultimate 1550+ word guide reveals the 12 biggest car insurance mistakes people still make in 2025 and exactly how to avoid them.
Mistake #1: Buying Only Third-Party (TP) Cover to Save ₹2,000–₹3,000
Reality in 2025:
- Average car repair cost after accident: ₹75,000–₹2.5 lakh
- New car depreciation in first year: 15–25% A ₹2,500 saving today can cost you ₹4–8 lakh tomorrow if your own car gets damaged.
Fix: Always buy Comprehensive Policy + Zero Depreciation Add-on (especially for cars < 5 years old).
Mistake #2: Not Declaring NCB Correctly
No Claim Bonus (NCB) in 2025 goes up to 50% after 5 claim-free years. Many people lose 20–50% discount because:
- They renew late (even by 1 day after expiry → NCB becomes zero)
- They don’t transfer NCB when selling old car
Fix:
- Renew at least 3–5 days before expiry
- Take NCB certificate from old insurer when selling car
Mistake #3: Choosing Wrong IDV (Insured Declared Value)
IDV = Maximum claim you’ll get if car is stolen or total loss. Dealers/agents deliberately under-declare IDV to reduce premium by ₹1,500–₹4,000.
Example (2025 rates):
| Car Model | Correct IDV | Under-declared IDV | You lose at claim time |
|---|---|---|---|
| Hyundai Creta | ₹12.5 lakh | ₹9.8 lakh | ₹2.7 lakh |
| Toyota Innova Hycross | ₹22 lakh | ₹17 lakh | ₹5 lakh |
Fix: Never accept more than 7–10% lower IDV than ex-showroom price (minus depreciation).
Mistake #4: Skipping Zero Depreciation Add-on
Without Zero Dep: You pay depreciation on every part With Zero Dep: Company pays 100% parts cost
2025 depreciation rates:
- Rubber/Plastic/Nylon: 70%
- Fibreglass: 50%
- Metal parts: 30–50%
Real claim example: Bumper + headlight replacement = ₹78,000 Without Zero Dep → You pay ₹42,000 With Zero Dep → You pay only ₹1,000 (deductible)
Mistake #5: Not Adding Engine Protection Cover (2025 Must-Have)
Floods & waterlogging increased 300% in last 3 years. Standard policy does NOT cover engine damage due to water ingress. Engine repair/replacement cost: ₹80,000–₹4.5 lakh
Fix: Add Engine Protect Add-on (costs only ₹1,200–₹3,500 extra)
Mistake #6: Ignoring Invoice Cover (Return to Invoice)
If car is total loss/stolen → Normal policy pays only IDV With RTI add-on → You get full original invoice price + road tax + registration
2025 Example: Car bought in 2024 for ₹15 lakh 2025 claim (total loss) → IDV ₹12 lakh With RTI → You get ₹15 lakh + tax = ₹17.5 lakh total
Mistake #7: Not Listing Correct Personal Accident Cover
IRDAI made ₹15 lakh PA cover for owner-driver mandatory in 2021, but many old policies still have only ₹2 lakh. Accident death/disability → Family gets only ₹2 lakh instead of ₹15 lakh.
Fix: Check your policy – if PA cover < ₹15 lakh, buy separate PA cover (₹300–₹500/year)
Mistake #8: Wrong Add-ons = Wasted Money
Common useless add-ons people buy blindly:
- Roadside Assistance (if you live in metro & have car company RSA)
- Key Replacement (costs ₹800 but claim limit ₹2,000 only)
- Daily Allowance (₹500/day for 5 days = ₹2,500 max)
Smart add-ons to buy in 2025:
- Zero Depreciation
- Engine Protect
- Return to Invoice
- Consumables Cover
- Tyre Protect (new in 2025)
Mistake #9: Not Updating Nominee & Address
Claim rejected cases in 2025:
- Nominee name missing → Legal heir certificate required
- Address changed → Insurer says “wrong garaging location”
Fix: Update nominee, mobile number, and address every year.
Mistake #10: Renewing with Same Insurer Without Comparing
Premium difference between companies in 2025: ₹4,000–₹12,000 for same car & add-ons. Example: Maruti Baleno
- Company A: ₹24,500
- Company B: ₹18,200 (₹6,300 cheaper)
Fix: Use Policybazaar/Coverfox/Acko every renewal – save thousands.
Mistake #11: Hiding Modifications
LED lights, alloy wheels, CNG kit, body wrap – if not declared → Claim rejected. Even ₹5,000 alloy wheels not covered if not declared.
Fix: Declare all modifications + pay small extra premium.
Mistake #12: Not Reading Policy Wordings
90% people never read exclusions. Common hidden exclusions in 2025:
- Driving without valid PUCA pollution certificate
- Using private car for commercial purpose (Ola/Uber)
- Tyre damage without vehicle damage
Bonus: Best Car Insurance Companies in 2025 (Claim Settlement + Network Garages)
| Rank | Company | CSR (2024-25) | Network Garages | Best For |
|---|---|---|---|---|
| 1 | Acko | 98.7% | 4,500+ | Digital claims, low premium |
| 2 | Go Digit | 98.2% | 6,800+ | Zero Dep + Engine Protect |
| 3 | HDFC Ergo | 97.9% | 8,200+ | Cashless everywhere |
| 4 | Bajaj Allianz | 97.5% | 5,500+ | RTI + Invoice Cover |
Final 2025 Checklist Before You Renew/Buy
- Comprehensive policy (not just TP)
- Correct IDV (max 7–10% less)
- Zero Depreciation + Engine Protect
- ₹15 lakh PA cover
- Return to Invoice (if car < 5 years)
- Renew before expiry
- Compare on 2–3 portals
- Read exclusions once
Do these 7 things → Save ₹50,000–₹5 lakh lifetime!
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