Some basics to avoid trouble with car insurers due to laxity or silly mistakes.
In 2005, when a deluge of rain hit Mumbai, thousands found themselves stuck on roads and highways. Many had to simply leave their cars and walk.
Later, it came as a rude surprise for many when insurance companies rejected claims, pointing to policy wordings. These were owners who tried to start the car to check if it was working fine or needed repair. They were not aware that this move of theirs can jeopardise their claim, as a simple move to check the condition of the vehicle can, often, severely damage the engine.
| ACT FAST | ||
| Hydrostatic lock (In Rs) |
Repaired within | |
Repaired after
a week of
submerged
“If a car is submerged above the tyre level, never try to start it unless the company’s authorised mechanic inspects the vehicle and gives the green light,” says Ajay Shah, vice-president, customer service motor, ICICI Lombard General Insurance Company.
If an authorised person is unavailable for inspection at your doorstep, the company has a provision wherein the four-wheeler can be towed to a nearby workshop. The insurer pays the towing fee, usually restricted at Rs 1,500 for each claim.
Engine
During monsoons, damage to the engine is the most common rejection a car owner faces. The logic is that the engine cannot be severely damaged unless someone tries to forcefully start the car.
“In a deluge, if water reaches the engine, it can be washed off easily: changing the oil and a little repair can get the car running. However, if the person tries to start the car with water in the engine, parts get damaged, leading to a condition called hydrostatic lock,” adds Shah.
The cost of repair for such damage can be as high as 15-18 per cent of the vehicle cost. For a Rs three-four lakh car, the expense can be up to Rs 50,000. For a mid-size car like Honda City, the repair can cost up to Rs 1,50,000.
Since the person’s attempt to start the car aggravates the damage, companies classify this as a consequential loss. The policy wording of car insurance clearly states the company is not liable to make any payment in case of “consequential loss”.
Safeguard: If driving in flood water, stop the car if the water level goes above the height of the tyres. If driving is inevitable, shift to the first gear, press the accelerator to increase engine speed and drive through. Once out of the water, continue to accelerate the engine to clean the silencer.
Timely reporting
Insurers can also reject claims if the person does not inform the company in time. This is more relevant in case of cars that get submerged as they are parked in a basement.
“If repairs are not carried out in time, the damage can increase manifold due to corrosion. Delays can also lead to the four-wheeler giving consistent problems later,” said Vijay Kumar, head, motor insurance, Bajaj Allianz General Insurance Company.
If small cars costing Rs three-four lakh are submerged, the cost of repair on the first day is Rs 30,000-40,000. After a week, this can inflate to Rs 1.5–2 lakh. Further delays can make the car uneconomical for repairs.
It is worse in high-end cars. Repairing a Mercedes C-class after a day of being submerged can cost Rs two-three lakh. After a week, the cost can be as high as Rs 20-30 lakh.
This can be rejected, given the policy wording that: ‘The insured shall take all reasonable steps to safeguard the vehicle from loss or damage and to maintain it in an efficient condition.” Insurers say if not informed in time, it implies the person has not taken sufficient steps to control the damage.
Safeguard: Inform the insurance company within a reasonable time, that is, within 48-72 hours.
Caps and depreciation
Insurers keep a cap on reimbursing vehicle parts made of rubber, nylon or plastic. For example, motor insurance from Bajaj Allianz General Insurance has a 50 per cent cap. If these parts are damaged and need replacement, the owner would have to pay the remaining amount.
As the car ages, insurers depreciate certain parts in the vehicle like electronic modules, airbags, batteries, upholstery, stereo, and so on. The first-year depreciation is usually 10 per cent. It can be 25 per cent between third and fourth years. Getting an electronic module power steering changed, for example, can be an expensive affair. As car features get better, the number of modules increases. A low-end car can have just one electronic module and replacing it can cost Rs 15,000-20,000. For a mid-size car, a module can cost Rs 30,000–40,000.
Safeguard: There is no option in this case but to try and park the car at a place where the water does not rise above the tyre level.
