Car insurance is mandatory and most buyers just sign up for it; they don’t pay attention to what it really covers and what it doesn’t. If a policy holder has to pay from his pocket for replacing rubber or metal parts in case the car meets with an accident, for instance, then the entire purpose of insurance gets defeated. One can overcome this if motor insurance is bought with add-on covers.
Insurers offer such covers for engine protection, road-side assistance and personal belongings lost in an accident. You could even buy protection for no-claim bonus, opt for nil depreciation or ‘return to invoice’, as add-ons which will fetch you a higher sum by way of insurance.
No-claim bonus
No claim bonus (NCB) is an incentive for those policy holders who have not made any claim against their car insurance policy in the previous years. Over time, NCB can be accumulated up to 50 per cent of premium. However, even one claim on the policy can bring this down to zero. The NCB cover ensures that even if claim is made, your NCB earned remains protected at the existing eligible percentage, instead of becoming zero. This is a good add-on for all vehicle users. After all, one bad day on road should not spoil your safe driving record for years.
No claim bonus (NCB) is an incentive for those policy holders who have not made any claim against their car insurance policy in the previous years. Over time, NCB can be accumulated up to 50 per cent of premium. However, even one claim on the policy can bring this down to zero. The NCB cover ensures that even if claim is made, your NCB earned remains protected at the existing eligible percentage, instead of becoming zero. This is a good add-on for all vehicle users. After all, one bad day on road should not spoil your safe driving record for years.
Return to invoice
This benefit can be availed of only in the first or second years after buying a car. In the event of a total loss following an accident or if the insured vehicle is stolen and not recovered, the insurance company usually only pays the shortfall, if any, between the amount insured and the purchase price of the vehicle or current replacement price of the new vehicle, whichever is less. But this add-on allows you to obtain the full invoice price.
This benefit can be availed of only in the first or second years after buying a car. In the event of a total loss following an accident or if the insured vehicle is stolen and not recovered, the insurance company usually only pays the shortfall, if any, between the amount insured and the purchase price of the vehicle or current replacement price of the new vehicle, whichever is less. But this add-on allows you to obtain the full invoice price.
This ensures full claim settlement without any depreciation on the value of spare parts that are replaced after an accident.
If your car’s bumper gets completely damaged and it costs Rs 20,000 to replace it, the insurer may usually pay around Rs 10,000, after allowing for wear and tear. But with ‘nil depreciation’ cover, the car owner gets the entire amount back. It is mostly available for vehicles that are less than three years old. So, your car parts may depreciate, but your claim value need not!
What if you meet with an accident and need immediate support for an emergency? Your insurer can provide it through fuel assistance, flat tyre, battery, towing or an alternate car for a certain period. Emergency road-side assistance is all about buying peace of mind.
Engine protector
Remember what monsoon can do to your precious car? During heavy rainfall, if your vehicle is submerged in water, on starting, the engine could break down. Your mechanic calls it hydro-static lock and it is a frequent occurrence during monsoon. Many car-owners make the mistake of starting their vehicle when it is submerged in water. The repair costs can be very high.
Remember what monsoon can do to your precious car? During heavy rainfall, if your vehicle is submerged in water, on starting, the engine could break down. Your mechanic calls it hydro-static lock and it is a frequent occurrence during monsoon. Many car-owners make the mistake of starting their vehicle when it is submerged in water. The repair costs can be very high.
(The author is Vice President - Retail Sales, SBI General Insurance.)
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