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4 car insurance add-ons you must consider

Opting for a comprehensive motor insurance might seem like a smart decision, but some policy holders know that it is riddled with limitations, and conditions.

A standard motor insurance policy covers loss against damage caused by theft, explosion, fire, riots, and acts of God. Some provide personal accident cover for the owner-driver while third-party policies cover only the legal liabilities arising from damage caused to the third party by your vehicle.

However, most policies do not provide cover for loss due to wear and tear. Physical breakdowns are not covered under regular policies either. Tyre punctures, roadside assistance, towing, etc., are some of the situations one encounters. Similarly, engine failures are also not covered and personal accident cover does not apply to your passengers, or a hired driver.

Given these exclusions, it is prudent to consider the following add-ons to your standard motor cover:


1.Zero depreciation

A comprehensive motor insurance policy takes into consideration the depreciated value of the parts to be replaced, and not the replacement value. The insurer will make the deduction from your claim, leaving a significant portion of the cost as your out-of-pocket liability. This is where the Zero Depreciation cover helps.

It ensures that you are comprehensively covered irrespective of depreciation. Which means in case your car is damaged in an accident, the insurer is then liable to cover the entire cost. Recommended for new drivers, this cover is available to vehicles up to three to five years old, with a maximum of two claims during the policy period.


2.Return to Invoice

In case of total loss or theft of your vehicle, the comprehensive insurance policy will only cover its insured declared value (IDV). The IDV is the current market value of the car, factoring in depreciation. In such cases, a Return to Invoice cover could prove beneficial.

This add-on will cover the difference between the IDV and the original purchase price of the vehicle, in case of total loss. If the same car model is available in the market at a lower price, then this lower cost will be considered. A Return to Invoice cover is highly recommended for those in theft-prone areas. While it is not applicable on imported automobiles, it is available for vehicles up to three years old.


3.Engine protect

Engine damage caused due to accidents may be covered by your insurance policy. But damage to the engine caused due to other factors such as rain, and floods are not covered. As the most expensive component of your vehicle, engine repairs are also naturally, expensive.

An engine protect add-on usually covers the cost of damages caused due to water ingression, hydrostatic lock, oil leakage, as well as gearbox damage. It is ideal for new, expensive vehicles, and for those living in flood-prone areas. This add-on, however, is not applicable to regular wear and tear or damage caused by negligence.


4.NCB protect

Insurance premiums usually rise year-on-year. But with a No-Claim Bonus (NCB) Protect add-on, the premium can actually reduce. NCB is rewarded to a customer who hasn’t made a claim in the preceding year, for which he/she is given a discount of 20-50% on premium payable. NCB claims usually start at 20% on first renewal of the policy, with the discount increasing every claim-free year until 50% at the end of five years.

NCB Protect covers the policyholder and not the vehicle. Which means, you can retain your NCB cover even after switching to a new car or a new insurance provider. However, the policy cannot be transferred to another individual, except the legal heir to the car, on the policyholder’s death. If a claim is made wherein the insurer pays out, the no-claims bonus is lost.


Be smart, get full protection

A comprehensive motor insurance policy may not be enough to safeguard your financial interests during extraordinary contingencies. Maximize your policy’s coverage with add-ons to ensure minimal out-of-pocket expenses.

Talk to Reliance Money to know more about owning a car.