scorecardresearchWhy do we need add-on covers to protect our vehicles?

Why do we need add-on covers to protect our vehicles?

Updated: 02 Jun 2022, 08:09 AM IST
TL;DR.
Add-on covers are mostly ignored owing to the extra price tag though it is worth including them in your vehicle insurance cover to escape paying heavy charges towards vehicle repair or replacement in case of damage or theft. 
Adding that extra cover as “add-on cover” to your vehicle insurance

Adding that extra cover as “add-on cover” to your vehicle insurance

We have seen how the recent calamities have damaged many cars and other vehicles. Many instances of families meeting with unfortunate car accidents have shed light on the need to have some insurance in place that can pay toward car repair expenses at reasonable charges. Regardless of the benefits of buying insurance, many people sneer at the thought of paying for it. This explains why many car owners opt for buying the basic third-party insurance cover only. However, taking a comprehensive cover is important to ensure extensive repair of your car in case of damage.

When you are looking to buy car insurance also called a motor insurance policy, one must opt for comprehensive coverage that includes the benefits of add-on covers like zero depreciation, engine cover, vehicle replacement, roadside assistance and towing, etc. The advantage of having these optional add-on covers is that they secure even those parts of the vehicle whose coverage has been excluded from the policy.

Understanding comprehensive motor insurance

Buying a comprehensive vehicle insurance policy means paying to cover your own damage over and above the mandated third-party insurance cover. This is because the third-party insurance cover pays only for the damages to one’s insured vehicle other than making good for the damage caused to other’s vehicles or property due to an accident. The coverage amount does not differ and is fixed by the Insurance Regulatory and Development Authority of India (IRDAI).

Apart from covering the damage caused to the car due to an accident, having a comprehensive car insurance cover means that the insurance company will also pay for the accidental death or disability of the insured vehicle’s owner. In case of theft, the vehicle’s owner will receive in full the Insured Declared Value (IDV) of the vehicle from the insurer. The value of the IDV is fixed every year at the time of policy renewal depending on myriad factors. Furthermore, having comprehensive car insurance ensures that the insurance company pays for any damage to your vehicle caused by natural calamities, fire and acts of vandalism.

Why add-on covers?

Considering the increasing number of vehicle accidents these days, it makes sense to opt for add-on covers along with a comprehensive insurance cover too. For example, choosing the “Zero Depreciation Cover” allows the insured to claim the full amount on the value of parts like plastic parts, fibre, rubber tubes in tyres, windscreens, etc, owing to an accident. Many insurance companies offer this cover for the first five years by charging more premiums at reasonable rates.

Regular driving for a prolonged period subjects vehicles to wear and tear, thus, reducing the overall value of the car. The rate of depreciation can be as low as five per cent initially for the first six months with the same going up to 50 per cent for vehicles plying on the roads for more than a decade. Furthermore, in case of a vehicle meeting with an accident, the insurance company pays for the parts that must be replaced post deduction of depreciation. The policyholder must then pay the value of the new parts minus the depreciated value. However, if the vehicle owner has paid for the zero-depreciation add-on cover, the insurance company will have to pay in the full the price of the damaged parts.

Another important add-on cover that comes to mind is the engine add-cover. This is important for vehicle owners living in low lying areas or places prone to frequent floods and consequent inundation. This cover ensures protection of the car engine in case of floods as the hydro-static lock is believed to be a major cause of engine failure. Having this add-on cover helps the insured to seek indemnity against the money spent on repairing or replacing the engine affected by electrical breakdown due to flood water entering the vehicle. Paying for this add-on cover helps the insured to recover the full invoice price of the vehicle if it is damaged or lost due to an accident or theft.

Incidents of vehicle breakdowns are common. This explains the need to opt for the break-down assistance add-on cover that will aid the insured in getting access to roadside assistance and towing facilities.

Many vehicle owners harbour the misconception of add-on covers being too expensive. While paying for them may look like an added expense, it is worth paying them considering the amount that would otherwise be spent on vehicle repairs. Paying for vehicle repairs can be expensive depending on the model of the insured’s vehicle.

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First Published: 02 Jun 2022, 08:09 AM IST