How Add-ons Widen a Car Insurance Coverage
The Motor Vehicles Act, 1988, mandates every vehicle owner to have motor insurance. Therefore, it is best to buy a car insurance policy soon after purchasing a car. The policy extends financial protection if an unforeseen incident such as an accident, natural calamity and theft causes the loss of, or damages or destroys the insured vehicle.
Mainly, there are two types of car insurance third-party liability car insurance and comprehensive car insurance. Third-party liability insurance, mandated by Indian laws, protects you against legal liabilities arising upon the insured vehicle causing injury or damage to a third-party person or property/vehicle due to an accident. For protection against losses to the insured vehicle, you require a separate car own damage policy. Meanwhile, a comprehensive car insurance policy provides coverage for both third-party and own damages. You can also widen the scope of coverage of your comprehensive car insurance policy by including add-ons.
What are add-on covers?
Add-on covers, or simply add-ons, are additional features that offer coverage for aspects the base car insurance plan does not include. Add-ons are optional; you can pick the ones you require to boost the protection of your vehicle. Every add-on benefits you differently, so you must read thoroughly about each add-on your insurer offers to choose the appropriate ones.
Types of add-ons
You can choose the types of add-ons to include in your car insurance policy based on your insurer. Some of the most common add-ons are:
- Engine protection cover
Your car's engine is one of its most essential components. Getting it repaired due to any damage can burn a hole in your pocket. The engine may get damaged due to several causes other than an accident. An engine protection cover comes in handy in such situations. If you reside in an area prone to flooding during monsoons, this add-on is a must.
A standard car insurance policy only covers damages that occur during an accident. However, the engine may have consequential damages after the accident. The engine protection cover provides coverage against lubricating oil leakage, engine damage due to water ingression leading to hydrostatic lock, and gearbox damage.
- Zero depreciation cover
Cars are depreciating assets and lose value over time. Mostly, car owners pay for the depreciation and replacement of parts with spare ones following an accident. The insurance company deducts the depreciation amount when settling your claim. If you have a nil or zero depreciation cover, the insurer does not deduct this amount and pays for the repair and replacement of the car's plastic, fibre and rubber components. Buying this cover is the most beneficial when you purchase a new car or if your vehicle is less than five years old.
- No claim bonus (NCB) protection cover
The insurer gives the policyholder a discount called a No Claim Bonus or NCB for having a claim-free year. The NCB can be used when renewing the insurance policy. However, if you file a claim during the policy tenure, you become ineligible for this discounted premium. The NCB protection cover ensures that your NCB does not get affected if you file a claim. This cover comes into effect when you file a claim to repair, and not replace, only the fibre, rubber, glass or plastic parts of the car.
- Return to invoice cover
Your car getting stolen or damaged beyond repair would be like your worst nightmare coming true. Having a return to invoice cover can help make such a situation better—the insurer gives you the entire amount stated on the car's purchase invoice. This cover cannot be used for repairs or minor damages and is best suited for people who live in theft-prone areas or have just purchased an expensive car.
- Roadside assistance cover
Having your car break down in the middle of the road and being stranded, especially during odd hours, is undoubtedly problematic. The roadside assistance cover helps you in such situations. It extends services such as tyre change, towing the car, refuelling, mechanic services, arranging for a taxi to help you reach your destination and the like. The policyholder can typically use this cover if they get stranded within a 500 km radius from the centre of the city. Having this cover gives you immediate access to help in unexpected circumstances.
- Consumables cover
A standard car insurance policy does not cover the cost of replacing consumables such as bearings, engine oil, screen washers, nuts and bolts etc. If the insured vehicle is involved in an accident and any of these parts require replacement, you must pay for them. However, if you have a consumables add-on, the insurer covers the expenses towards replacing consumables that have become unusable due to damage during an accident.
- Passenger cover
If your vehicle is involved in an accident, both you and your co-passengers are at the risk of getting injured. Having a passenger cover ensures that if your co-passengers suffer injuries, they receive financial support till they recuperate.
- Personal belongings cover
Having expensive gadgets such as your laptop, smartphone and tablet in your car while travelling is risky because they may get damaged if the vehicle is involved in an accident. A standard car insurance policy does not cover such items. For such coverage, consider getting a personal belongings cover.
- Daily expense reimbursement cover
The daily expense reimbursement cover pays for the cost of your commute when your car is undergoing repair due to any covered perils.
Besides these, some other add-on covers are the accessories cover, multi-car benefit cover, and key replacement cover. Although add-ons increase your premium, having the appropriate ones strengthens your insurance policy and helps you save more in the future. However, to avoid having unnecessary coverage, you must determine your requirements and choose only those add-ons that you need. Another way to save more on the premium is by purchasing a long-term car insurance policy. To make an informed choice, research the insurance products and add-on covers available before finalising an insurance policy.