In India, most people buy car insurance only because it is mandatory. What most don’t realise is that there’s the mandatory third-party insurance, and then there’s comprehensive insurance with many useful add-ons. And because of the absence of this critical bit of information, people under-insure their vehicles. This leads to losses in the long run. On the other hand, there are those who truly value their cars and they do all they can to ensure that their asset is well protected.
This article is for both kinds of car owners – those who value comprehensive insurance, and those who don’t. We’ll take a look at some critical add-ons car owners should consider with their insurance. But first, let’s understand the difference between a third party insurance plan and a comprehensive car insurance policy.
In the first kind of car insurance plan, coverage is offered only for damages caused to the third party – this is any party other than the insured and the insurer. Damages caused to you or your vehicle will not be covered by a third-party insurance plan. For this, you need a comprehensive car insurance plan, which not only provides third-party coverage but also coverage for you and your vehicle.
Despite having both kinds of insurance plans, you may sometimes need add-ons on your car insurance for instances such as breakdowns, theft of belongings kept in the car, damage to the engine, and damage to electronics, accessories and even the exterior body. These add-ons will ensure optimisation of your existing car insurance and help you save money in the long run — even if it makes your insurance premium higher. Let us look at some of these critical add-ons that you must have over your car insurance.
Personal Accident Cover
This add-on cover will ensure that you are compensated by the insurance firm in case you are injured in an accident where you were driving your car. To claim benefits under this cover, you will need to hold a valid driving license, should be the registered owner of the car, and the car insurance policy should be under your name. If you wish to cover your family riding in the car, you can purchase an add-on known as ‘Personal Accident Cover for Unnamed Passengers.’ This cover will extend to your friends, family, or anyone who travels with you in the car.
Roadside Assistance Cover
This cover can be a saviour during times when your car breaks down or is damaged and cannot move, your car runs out of fuel, your car tyre is punctured, your car gets locked and you have lost the key, you are unable to drive further due to an accident, etc. Some insurers also provide services such as on-the-spot repair, cab facility in cases where the car cannot be repaired immediately, accommodation in a nearby hotel if the car repairs take time and so on.
You should get this cover if you have fitted luxurious accessories in your car such as LCD TV, reverse camera, high-end infotainment system, etc. because your standard car insurance will not cover damages to all the accessories in the car. At an additional premium, you can also buy extra cover for theft of accessories. Purchasing this add-on cover is a good idea if you wish to shield your expensive car accessories from any damage or loss.
No-Claim Bonus Protection Cover
A no-claim bonus (NCB) in insurance is simply an incentive offered to you when you do not make any claims throughout the term of the insurance policy (usually 1 year). The incentive is given in the form of a discount when you renew the insurance. If you do not make any claim for five consecutive years, 50% discount on the premium will be retained but if you do, your NCB will fall to zero. So, if you wish to protect your accumulated NCB from dropping to zero when you make a claim, you should purchase an add-on cover known as ‘No Claim Bonus Protection Cover.’
Commodities with limited and specific use are known as consumables. Some of the car consumables are nuts and bolts, engine oil, lubricants, grease, washer, radiator coolant, etc. These consumables would often need replacement but your basic car insurance policy will not cover them. This add-on car insurance cover is useful in cases where your vehicle meets with an accident and you do not wish to shell out money from your pocket to pay for these consumables.
Zero Depreciation Cover
To counter the deficit in value caused by depreciation, an add-on is offered along with comprehensive insurance policies. This is the zero depreciation add-on. Such policies are also called zero-dep policies. They offer complete coverage without factoring in depreciation. In case of repairs under a zero-dep cover, the insurer provides 100% of the repair costs instead of the depreciated value of the vehicle. This add-on is typically provided on new vehicles and may not be provided to old vehicles that have already depreciated and suffered wear and tear.
The above-given add-on covers can enhance your regular comprehensive car insurance plan. Yes, you will have to pay extra premiums for these covers but in the event of an accident, it will save you a lot of money. It will also ensure peace of mind knowing that your valuable asset is well-protected! Lastly, it’s always a great idea to compare different insurance products before signing up for the one that best matches your requirements.
The writer is CEO, BankBazaar.com, India’s leading online marketplace for loans and credit cards.