In India, the government mandates that every car owner must have at least third-party car insurance to drive legally. Since this policy only covers legal liabilities arising from injury to pedestrians and motorists and damage to their property, having a comprehensive insurance policy is recommended. However, this policy also has limitations, and therefore, to bridge the gap, motor insurers have started offering add-ons to complement your base cover.
Key Car Insurance Add-Ons to Know About
Here are the eight add-on covers you must explore when buying or renewing your car insurance online.
Roadside Assistance Cover
Nothing can be worse than driving late at night and suddenly having your car stop in the middle of a lonely highway. RSA cover comes in handy here. The add-on provides free towing services to the nearest garage within a 50-kilometre radius. If the breakdown is due to bad fuel, the insurer pays for emptying and refilling the fuel tank.
If you need accommodation until your vehicle is fixed, the insurer covers a one-day stay for the occupants of the insured car. The add-on also arranges a free taxi for up to 50 kilometres and pays for battery jump-start services as well.
Engine Protection Cover
Regardless of the car you own, the engine is the costliest component it is equipped with. However, it faces the risk of damage due to water ingress and leakage of lubricating oil. The risk is slightly higher if you live in or mostly drive your car in a flood-prone area. To ensure financial protection against such occurrences, complement your standard car insurance policy with an engine protection cover.
The engine protection rider coverage extends to pistons, crankshaft, connecting rods, cylinders, and the hydrostatic lock. However, it excludes damage to the gearbox.
NCB Cover
When you drive safely on the road and avoid making claims during the policy year, the insurer rewards you with the No Claim Bonus (NCB). The reward percentage is 20% for one claim-free year, 25% for two consecutive claim-free years, 30% for three years, 35% for four years, and 50% for five consecutive claim-free years. However, despite your excellent driving skills, you never know when a pedestrian might suddenly jump in front of your vehicle or when a careless motorist crashes into your car. In such scenarios, filing a claim becomes necessary.
NCB cover ensures that even if you make a claim during the policy year, your rewards remain intact. However, do check with your insurer for the number of claims admissible in the policy year without reducing the NCB percentage.
Return to Invoice Cover
Return to Invoice, or RTI, coverage comes in handy if your vehicle is irreparably damaged or damaged beyond 70% of its value. In this case, the add-on pays for the entire on-road value of the car at which you purchased it. For those unaware, the on-road price includes registration charges and road tax, which can itself be in lakhs depending on the make and model.
Garage Cash Cover
When your office is far from your residence and your vehicle is damaged to an extent that it takes a few days to get fixed, the cost of commuting to your workplace may trouble you. In this case, garage cash cover ensures you are provided with a daily cash allowance to cover commuting expenses until you receive your car back.
When computing the cash allowance, the insurer applies the concept of ‘Time Excess.’ For example, suppose your car is damaged on October 1st, but you tow your vehicle to the service centre on October 3rd, and the insurer conducts the loss assessment on October 6th. In that case, the credit of the cash allowance will begin from October 6th only.
Zero Depreciation Cover
Like any other asset, four-wheelers are also subject to age-related wear and tear that reduces their value. As per IRDA guidelines, when the car is less than six months old, its value depreciates by 5%; when it is older than six months but not more than a year, 15% depreciation applies. The rate rises to 50% if the car is older than five years. Similarly, components of your car, such as fibreglass parts, paint, and parts made of nylon, rubber, or plastic, attract depreciation at rates ranging from 30% to 50%.
In this case, if you file a claim without a zero-depreciation cover, the insurer will pay for repairs and replacements after deducting the applicable depreciation percentage.
Consumable Cover
During repairs and replacements, certain minor expenses can collectively add up to thousands on your repair invoice. This includes oil and lubricants, nuts and bolts, and items like washers, screws, bearings, and clips. Consumable cover compensates by reimbursing for AC gas, brake oil, and the items mentioned above.
Personal Belongings Cover
You have parked your car on the roadside or in a designated parking space and have left your laptop or a few other costly items in it. When you return, you notice that the thief has broken the window and looted your belongings. Personal belongings cover reimburses for these items.
To ensure a hassle-free claim, make sure you report the incident to the nearest police station within 24 hours. Also, ensure you have documented proof of the belongings you lost from your car.
Conclusion
Car insurance add-ons come at an additional cost over your base premium. It is recommended to choose the riders wisely. For example, if you only drive within the city, and mostly for commuting to an office just 2 kilometres from your house, roadside assistance might not be necessary. Conversely, if you live in a flood-prone area, getting an engine protection cover is highly recommended.
