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What is Bumper To Bumper Insurance ?
Bumper-to-bumper insurance is termed as an insurance cover when the claims for vehicle parts are settled without applying depreciation as in the case of package policy or comprehensive policy, claims are settled after applying depreciation on replaced parts. Depreciation implies the reduction in the value of the vehicles and its parts due to wear and tear.
Understanding bumper-to-bumper insurance policy
To gain immunity from depreciation, people can opt for a bumper-to-bumper add-on insurance policy cover. This add-on policy is only made available to cars aged at least five years or less.
In the bumper-to-bumper car vehicle insurance policy, the insurance covers the cost for all the parts, except for the engine, tyres, batteries, tubes and glasses. This car vehicle insurance policy is usually provided as an add-on with the standard policy.
How is the claim settlement done in ‘bumper-to-bumper’ insurance
During the claim settlement, the insurer will provide compensation based on the depreciated value of the vehicle and its parts. This means that the policyholder has to cover the gap between the actual replacement cost and the depreciated value of parts.
For instance, if there is a charge of Rs 50,000 for the damages incurred by your car in an accident, you are likely to pay between Rs 25,000 and Rs 30,000 for the depreciation of the vehicle's parts. This happens when you only have comprehensive car insurance cover. But, if you have an add-on zero depreciation or bumper-to-bumper insurance cover, there will be no deductions on the claim amount based on the depreciation.
The bumper-to-bumper insurance is ideal for luxury car insurance, new car owners, people who live in an accident-prone area, and those who are concerned about minor dents.
What is not covered in ‘bumper-to-bumper’ insurance
There are a few types of damages when certain parts of the car cannot be covered despite having a bumper-to-bumper or zero depreciation insurance cover:
— Engine damage is not covered due to water flooding or oil leakage
— It does not cover damage to any kind of electrical or mechanical breakdown and standalone tyres
— It does not cover change of consumable items or oil change
— It does not cover external fitting like gas kits, etc
Latest Updates on Bumper To Bumper Insurance
Premium
Currently, under Section 80C of the Income Tax Act, an individual can claim a deduction of the life insurance premium paid from his/her taxable income