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A comprehensive motor insurance policy might be of little use in the monsoon season, especially if you have an expensive car. A standard motor policy only pays for direct damages like an accident. Also spare-part replacement will fetch you a fixed amount with a standard policy when you might have spent more. Say, you need to replace your car’s windshield, you may get only Rs 3,000 from the insurance company when the new windshield would have cost you around Rs 10,000.
That's where add-on covers or riders step in. And, there is no waiting period applicable to motor insurance riders. So, these can be bought and used whenever there's a need.
Says Sanjay Datta, chief, underwriting and claims, at ICICI Lombard, “One should definitely have the engine protector cover (also called hydrostatic lock cover).” During the monsoon, many areas get flooded. Trying to start the car while it is submerged in water could be damaging. Repeated tries may break down the car. This phenomenon is known as hydrostatic lock. Repairing the engine is costly.
Engine damages aren’t payable under a regular motor insurance policy. Cost: 0.5 to two per cent of the insured declared value (IDV) of the car. So, if a car’s IDV is Rs 5 lakh, you will have to spend Rs 2,500 to Rs 10,000 for this cover.
In case of water logging, not only one or two parts but the entire electrical circuit could need replacing. This could be expensive and hence, an add-on policy would help.
In case of flooding, you might find yourself stranded due to engine damage. Roadside assistance cover comes to the rescue and the car is taken to the nearest garage by the insurance company’s vendor. The cost of this add-on cover is also in the range of 0.5 to two per cent of the car's IDV.
Then there are small expenses (5-10 per cent) that consumers have to bear against wear and tear of parts — nuts and bolts, screws, washers, grease, lubricants, clips, AC gas, bearings, distilled water, and so on. The company agrees to cover expenses incurred towards “those items or substances of specific use which at the time of loss are either totally consumed or rendered unfit for further consumption” arising out of damage to the vehicle insured and/or to its accessories caused by any peril as covered under the policy, says Amarnath Ananthanarayanan, chief executive officer of Bharti AXA General Insurance. This will cost another 0.2 to 0.4 per cent of the car’s value.
After a car is damaged in the monsoon, the difference between the invoice price and the insured value of the car is higher than the price of a new car. The return to invoice cover bridges the gap and makes an investment in a new car of similar model easy.
Over a period of time, no-claim bonus (NCB) can be accumulated to claim a discount of up to 50 per cent. But even a single claim can bring this down to zero. To protect this, you could buy an NCB retention cover. Here, the customer's status of a no claim will be restored.
Always carry a copy of the policy document and the toll-free number in your car. Most car manufacturers offer free pre-monsoon check-ups, which prepare your car better. You could get anti-rust treatment and an under-body coat before the monsoon season starts. This will cost about Rs 4,000 to Rs 8,000 each, depending on the model.
Many add-ons are bundled as a package by insurance companies. If you end up buying all of these, you will pay a high premium. Understand your needs and buy accordingly.
