Car Insurance Add-On Covers

Car insurance is an integral part of buying a car in India. A person cannot drive a car legally on public roads until the vehicle is covered under a car insurance policy with at least third party cover. For the unversed, car insurance provides financial coverage to the car owner against any damage or loss sustained by the insured car or caused to third parties. It allows a person to drive his/ her car without worrying about the possibility of any financial loss. As the motor laws of the country only mandate third party insurance cover for every car in India, people can obtain more extensive coverage for their car by opting for a comprehensive car insurance policy.

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Comprehensive car insurance is a type of four wheeler insurance policy that covers more than just third party liabilities. It provides coverage for the own damages of the car along with any third party liabilities arising out of the insured car. The owner-driver of the car can also get personal accident cover under this type of policy, provided they don’t have one already. In short, a comprehensive car insurance policy provides all-round protection for the insured vehicle from any unforeseen loss or damages.

A comprehensive car insurance policy is the highest level of coverage that a car owner can ensure for his/her four wheeler. But wait, there’s more. Even a comprehensive car insurance cover can be amplified to ensure better monetary protection for the car with the help of add-on covers.

What are Car Insurance Add-On Covers?

Under car insurance, an add-on cover is referred to as an additional cover that can be purchased by a car owner to strengthen the coverage level of his/ her car. It helps a car owner to enhance the financial security of a car over and above the standard policy coverage. Thus, it provides extended coverage to the insured four wheeler under a car insurance policy.

Since add-on covers provide extra coverage to an insured car, it comes at an additional cost. A car owner needs to be purchase add-on covers under his/ her car insurance policy by paying an additional premium amount. As a result, car insurance premiums increase on buying add-on covers.

However, car insurance add-on covers are only available under comprehensive car insurance or standalone own damage car insurance plans. It is not available under a third party car insurance policy. This happens because third party car insurance deals with injuries or damages caused to third parties and does not cover the own damages of the insured car. Thus, buying add-on covers under third party insurance will be futile.

On the other hand, add-on covers are designed with the aim to amplify the coverage of a car. It is the comprehensive and standalone third party car insurance policy that offers financial protection to an insured vehicle. Hence, it is only logical to offer add-on covers under car insurance plans that offer own damages cover.

Various Types of Add-On Covers Available Under Car Insurance

Several add-on covers are offered under car insurance plans available in India. Take a look at the various kinds of add-on covers that can be purchased under a comprehensive or standalone own damage car insurance policy:

  • Zero Depreciation Cover

    Every car undergoes depreciation as it ages. A motor insurance company accounts for depreciation on the parts of the car and deduct it from the IDV of the car. At the time of claim settlement, the claim amount is paid by the insurer keeping the applicable depreciation on the car parts in mind. This is where the ‘Zero Depreciation’ cover comes to your rescue.

    Zero Depreciation cover is an add-on cover that shares the burden of depreciation on the car’s parts and enables a car owner to get a higher claim amount. It ensures that depreciation is not considered while paying the claim amount at the time of claim settlement. Also known as nil depreciation or bumper-to-bumper car insurance, this add-on cover is mostly available for cars up to five years old. Moreover, some insurers may only permit up to two zero depreciation claims while some may allow unlimited claims.

  • Engine Protection Cover

    The engine is one of the most important parts of a car. But sadly, any non-accidental damages to the engine of the car is not covered under a regular comprehensive car insurance policy. However, any damage or loss to the engine of the insured car can be covered with the help of the ‘Engine Protection’ add-on cover.

    Engine Protection cover provides coverage for any loss or damages caused to the engine of the car due to issues, such as water ingression, oil spill, electrical or mechanical breakdown of the engine, etc. It also provides financial aid for the replacement of the car’s engine or its parts. But just like the zero depreciation cover, the engine protection cover is also available only to cars that are not more than five years old.

  • No Claim Bonus Protection Cover

    No Claim Bonus (NCB) is one of the most beneficial features available under a car insurance plan. It is a discount on the premium that is granted if a car owner does not raise any claims in the previous policy tenure. NCB enables car owners to save at least 20 per cent to a maximum of 50 per cent in a span of five years. But the moment a car insurance claim is filed, the NCB restores to zero irrespective of how big or small the claim amount is. This can be avoided with the help of a ‘No Claim Bonus Protection’ add-on cover.

    A No Claim Bonus Protection cover protects the NCB of a car owner despite raising a claim. It keeps the NCB intact even if the car owner raises a claim in the previous policy year. It enables car owners to reduce their premium using the NCB irrespective of whether a claim was raised. Note that NCB protection cover applies only to own damage premium as third party part of the total premium is decided by the IRDA or Insurance Regulatory & Development Authority of India and cannot be altered.

  • Roadside Assistance Cover

    A car can stop working anytime without a prior warning. This may happen in the middle of the road leaving you stranded. Finding a mechanic nearby could be a task and any repair work may get quite expensive. In such situations, a ‘Roadside Assistance’ add-on cover can be useful.

    A Roadside Assistance cover provides the car owner with any on-road assistance services in case the insured car breaks down in the middle of the road. Just a  call to the insurance company and a mechanic is arranged to take a look at the vehicle and help out. Some of the assistance services available under this add-on cover are changing a flat tyre, minor on-site repair, car towing, fuel delivery, the arrangement of replacement car keys,  battery jumpstart, etc.

  • Return to Invoice Cover

    The moment a car is sold and leaves the showroom, its value depreciates. The value of the car further reduces with each passing year. So, when buying car insurance, the IDV is estimated by considering the market value of the car that will be lower than the price at which the car was purchased. As a result, the car owner will not receive the invoice value of the car even if the vehicle suffers from a total loss. However, the invoice value of the car can be obtained during claim settlement with the help of the ‘Return to Invoice’ add-on cover.

    The Return-to-Invoice cover enables a car owner to receive the invoice value of a car as the claim amount in the event of a total loss, constructive total loss or theft of the car. With this add-on cover, the IDV of a car is fixed equal to the price at which the car was purchased. Thus, a car owner can get a higher claim amount with this cover. However, note that Return-to-Invoice cover is available only for cars that are less than three or five years old, depending on the insurance company.

  • Daily Allowance Cover

    When a car is sent for repair at a garage, it may take more than a couple of days. In case the car owner does not have another car, he/she may have to hire a vehicle or use public transport for the daily commute. This may result in unnecessary travel expenses. The ‘Daily Allowance’ add-on cover can be of help here.

    The Daily Allowance Cover is an add-on cover that provides travel allowance to cover day-to-day travel expenses in case the insured car is getting repaired at a garage. It compensates the car owner for any travel expenses incurred while the car was at the garage. However, this add-on cover applies only if the insured car is getting repaired at the network garage of the motor insurance company.

  • Passenger Cover

    Car accidents can happen anytime no matter how many people are travelling in the vehicle. A major accident can not only cause damage to the vehicle and injuries to the driver but also the passengers. But, unfortunately, the personal accident-cover available under a regular car insurance policy does not cover the treatment expenses of the passenger. This is where ‘Passenger Cover’ comes into the picture.

    The Passenger cover is an add-on cover that provides coverage for any medical expenses incurred by the passengers of the insured car in case of an accident. It covers the cost of hospitalization expenses, treatment expenses as well as ambulance fees. Moreover, it also provides compensation in case the accident results in the disability or death of a passenger.

  • Consumables Cover

    When a car is getting repaired, a lot of consumables items are used. These may include, nuts & bolts, lubricants, grease, washers, engine oil, brake oil, screw, oil filter, bearing, etc. The cost of such consumable items is not usually covered under a comprehensive car insurance policy. The car owner has to bear the cost of these consumable items on their own. But that happens only as long as the policyholder does not have a Consumable cover.

    The Consumable cover is an add-on cover that reimburses the expenses incurred towards consumables items used in an insured car during repairs. It provides coverage for all the consumable items used while the car was being repaired. But even this add-on cover is not available for cars older than five years.

  • Tyre Protect Cover

    The tyres are another essential component of a car. Regular usage can damage the tyres of the car. But, unfortunately, a car insurance company does not pay for any damages or loss of the tyres if it is not arising out of an accident. The cost of repairing or replacing the tyres has to be borne by the car owner. This is where the ‘Tyre Protect’ cover can come in handy.

    The Tyre Protect cover reimburses any expenses incurred towards the repair or replacement of the tyres of the insured car. It ensures that the motor insurance company pays for tyre damages, such as puncture, in-tyre bulge, tyre cut, bursting of the tyre, etc.

  • Key Replacement Cover

    A car cannot operate without its keys. It is an extremely important tool but extremely easy to lose. Moreover, if the insured car has an electronic key, obtaining a new key or getting it replaced can get expensive. Still, a regular car insurance policy does not pay for the replacement of car keys. But that’s not the case with a ‘Key Replacement’ cover.

    A Key Replacement cover is an add-on cover that provides coverage for any expenses arising out of replacing the keys of the insured car. It also covers the cost of repair the lock-set of the car in case the keys have been lost, stolen or damaged.

  • Loss of Personal Belongings

    Everyone carries personal belongings in their car. But a few unlucky ones lose the items from the vehicle when they leave the car unattended or when the car is stolen. In either situation, no compensation is offered by the insurance company for the loss of personal items. The car owner has to bear its loss unless he/ she owns a ‘Loss of Personal Belongings’ add-on cover.

    The Loss of Personal Belongings cover is an add-on cover that compensates for the loss of any personal items stolen from the car or with the car. It also pays for any damages caused to the personal belongings inside the car. It covers various kinds of personal items, including electronic equipment.

In a Nutshell

Car insurance is a great way for a car owner to protect himself or herself from a financial loss resulting from the insured car. But the financial protection available under the policy can be further enhanced by purchasing add-on covers. Thus, all car owners should buy those add-on covers that are really required for the financial security of their car.

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