Don’t just drive home the standard car insurance policy

Author: Rajiv Kumar, MD & CEO , Universal Sompo General Insurance

With escalating spare part costs and increasing calamities the standard motor insurance cover would prove to be inadequate and bang into your financial health.

It’s raining new car launches. In the blinding glaze of the beauty on wheels you are driving home, have you paid little attention to the car insurance you opted for. Though it comes at a miniscule cost compared to the cheque you handed over for the car, the car insurance policy and the features you opted for would be of immense value in the years to come.

Gone are the days when the car repair bills would cause a dent on your pockets as the standard motor insurance policy would be limited to damage caused to your vehicle, within the limits of depreciated value of the vehicle, apart from the third party damage.

Today, there are additional add on covers that can be tagged on to your regular car insurance policy and you wouldn’t face the bumper of depreciation on the road to car insurance claims. Major damages such as hydrostatic loss during floods wouldn’t be stopped by the red signal of rejection. Towing of your car and additional transportation costs wouldn’t hammer down your wallet if you opt for some quintessential add-on covers presently offered on the car insurance platter.

Typically, the moment you stride past the showroom, the depreciation countdown begins. So, even if you were to file a claim the same day as the date of purchase, your claim value would be reduced by the specified depreciation limit applicable to various parts. It is highest (50%) for plastic and rubber parts and lower (0-30/50%) for fibre glass and metallic parts. The depreciation increase as the vehicle ages, so in following years you would be able to claim a further reduced value.

So, if you make a claim of Rs 40,000 for damage to plastic part of the car, then thanks to depreciation only Rs 20,000 would be payable under the regular comprehensive car insurance cover. But if you tick the zero depreciation cover box while purchasing or renewing the cover then the entire Rs 40,000 would be payable, subject to two claims a year.

Imagine the plight of car owners residing in flood-prone areas, where their cars or parts are damaged frequently. Such areas where your car can be submerged aren’t just a handful. As per the Geological Survey of India (GSI), nearly 12.5% area of the country is prone to major floods.

During the Mumbai and Chennai floods many drivers learnt a bitter truth – cranking the car engine when the vehicle is submerged causes irreparable damage to the car engine. The pain point for many was that such damages aren’t covered under the regular car insurance policy. The amount they had to bear isn’t diminutive. In some vehicles it can be as high as 20-40% of the total vehicle cost. Hydrostatic loss could escalate to as much as Rs 4 lakh in a mid-segment car, while Rs 8 lakh in a high-end sedan.

Flood-water seepage not just causes damage to the exterior and interiors of the vehicle, but even destroys the electrical circuit and various sensors fitted in cars. Such damages could additionally cost money ranging anywhere between Rs 1-2 lakh in smaller vehicles to Rs 3-10 lakh in luxury cars.

To protect your financial health from toppling over due to such exorbitant repair costs, another add-on cover of engine protect is recommended, especially to those residing in low-lying and flood-prone areas with proximity to major water bodies.

The fatigue of stressed lifestyle is forcing many to seek a fresh lease of life away from cities. If short drive-down weekend getaways are your calling, then you should consider the road side assistance add-on cover. If you unfortunately ram into situation where you need emergency towing or on-spot repairs, then such expenses would be covered if you have opted for the RSA cover.

If the repairs aren’t possible immediately and you would require a taxi service back home or even accommodation close by then you need not fret.

So, erase the crease of worry and smile ear to ear as you drive home happiness.

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