How important is it to get an ‘add on’ insurance cover for a new car?

There are 10 lakh road accidents in India every year, in which close to 1.5 lakh people die, that is, 400 people die in accidents in a day.

According to a report by the Transport Research Wing associated with the Transport and Highway Ministry, 35 percent of the total deaths from accidents occur on National Highways and 28 percent on State Highways. Since we cannot make such accidents negligible, there should be a variation in compensation for losses during accidents. According to the Motor Vehicle Act 1988, a valid motor driving license must be mandatory to drive any vehicle on the road. However, as a customer we cannot get 100 percent immunity by taking only third party compulsory insurance cover. When you also get comprehensive (comprehensive) insurance cover, it also does not give you complete coverage for different types of losses. One should take risk cover as well as add on cover.

Return to invoice: This will ensure that the car owner gets the full invoice value, that is, the original price of the car, which includes road tax along with registration fees and the ex-showroom price of the car at the time of purchase. In a nutshell, this add on cover fills the space between those who charge the price of a car with insurance and the original price. This add on cover is not used for repairing or small damage. It is used to compensate a large financial loss due to a stolen car or major damage from the repair level.

Zero Depreciation Cover: This add on cover is especially recommended for new cars, as it helps reduce the cost of depreciation on replacement parts such as plastic / rubber, fiber, metal or paint materials. It is also known as negligible depreciation or ‘bumper to bumper’ cover. This removes the devaluation factor from coverage. Gives you the complete package. This usually equates to 15 to 20 per cent of the standard premium and is quite beneficial for car owners.

Roadside Assistance: Think that you are going for some urgent work and your car’s petrol runs out or your tire becomes flat due to puncture or there is some other problem in your car at a secluded place – in all such circumstances you Many problems may have to be raised. For example, you may have to spend many hours on the road in search of the right mechanic to get the car right. The road side add on cover was designed keeping in mind similar situations, where the person of the insurance company reaches your help immediately. Even in such a case when your car is locked and the key of the car remains inside the car. In such a situation, your insurance company will send your executive to your home and he will bring a duplicate key from you. You will get this add on cover for very little money, between 150 rupees to 500 rupees. This price depends on what the Insured Declared Value (IDV) of your car is.

The most beneficial aspect of this add on cover is that it is taken as a service, not as an insurance claim. No matter how many times you take advantage of it.

Engine Protection: A standard car insurance policy covers every damage done to a car engine due to an accident. But if water gets entrapped in the engine or any part of it or there is a defect due to oil leaking, then even a standard comprehensive insurance policy will not help you. For example, if you are out in the rain some day and your car’s engine gets water and it gets damaged, a standard insurance policy will not cost you repair. Similarly, if you are running a car without engine oil and the engine of the car malfunctions or the engine malfunctions due to road pits, then the insurance company will not pay you. Since engine repairing costs a lot and for a medium size car it costs anywhere between Rs 20,000 to Rs 50,000. In such a situation, you should take the Engine Protection Add on Cover. Especially for engine failure due to water logging or oil leakage. This add on cover is an essential cover, which falls in a nominal premium cost of only 0.15 per cent to 0.20 per cent of the insured depreciated value (IDV) of the car to avoid large expenses.

NCB Protector: No Claim Bonus (NCB) is a discount, when you do not make any claim throughout the year, at the time of renewal of your policy, the insurance company gives you some discount in the next premium. This is called No Claim Bonus and every year you do not make any claim, your discount percentage keeps increasing every year. But whenever you have taken an insurance claim for any loss, by then your no claim bonus is collected. To protect this No Claim Bonus (NCB), insurance companies have introduced an add on cover called NCB Protector, which rewards the car owner for retaining a certain NCB before you claim.

For example, if you have a 35% no claim bonus at the time of purchasing the policy and you have made only one claim during the new policy period, under the rule your NCB will be zero. But if you do not claim, then your NCB will be 45 percent. In this case, you will be entitled to 35 percent NCB (same slab) or 25 percent NCB (lower slab) at the time of renewal next year, depending on your product.

The most important thing is that you should renew the add on cover at the end of the year only with the old insurance company, otherwise you will lose all the benefits you get.

(The author is the head (motor insurance) of PolicyBazaar.com).
(The views expressed in this article are the personal views of the author)

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