While a Third-Party Insurance is mandatory by law, you can opt for a Comprehensive cover as it covers for both individual and third-party liability. But even a Comprehensive cover does not shield you from expenses in certain situations. Auto Insurers offer riders to help protect you from scenarios where coverage is normally excluded. These riders are optional Add-ons to your basic car insurance policy. Each rider gives auto owners certain unique advantages. Let us look at the most popular Car Insurance Add-On Covers available and discuss whether going for these Add-ons makes sense.
Car Insurance Add-On Covers Include:
a. Zero Depreciation Cover:
While comprehensive insurance covers both individual and third-party damages, it is not depreciation proof. In other words, if you claim damages, you will only be paid the amount after taking depreciation into account. With a Zero Depreciation cover add-on, you will be insulated from depreciation and can recover the market value upon claim.
b. Engine Coverage:
If you attempt to start your stalled vehicle submerged in water, it is likely to damage the engine of the vehicle. This is referred to as consequential loss. A consequential loss is an indirect loss caused due to reasons outside direct losses resulting from accidents. Insurers do not bear the cost of repair of engine resulting from consequential loss. With an Engine Cover/Hydrostatic cover, damages caused due to a consequential loss are covered.
c. Roadside Assistance:
With this Add-on, you can expect assistance for minor repairs, battery jumpstart, tyre replacement, etc.
d. Ambulance & Medical Expenses:
In the event, the policyholder meets with an accident, the insurance covers the cost of treatment including expenses incurred towards ambulance facilities.
e. Rental Reimbursement:
While this Add-on is not mainstream in India, the objective of this is to provide rental reimbursement for your interim travel arrangement while your vehicle is out of use (owing to damage/accident). Reimbursement could be for your usage of public transport, or for renting a vehicle, etc.
f. Personal Accident Cover:
With this Add-on, you can cover partial or total disability, accidental death, etc. While Add-ons lower your risk against various factors, they add to your premium outgo. Therefore, it will be wise to evaluate if you really need the Add-ons offered by your auto insurer. It may be worthwhile to consider the following aspects before going for a Car Insurance Add-On Covers :
Premium outgo varies by car make, model, engine capacity, etc. If you currently own a hatchback which is a few years old already, it may not be advisable to go for some of these add-on covers such as Zero Depreciation Cover. On the other hand, since the possibility of vehicle breakdown increases over time, it may be worthwhile to go for Roadside Assistance as an Add-on.
If you live in a city where monsoons don’t wreak havoc, you might not need Add-ons that are best-suited for vehicle owners that live in coastal areas or cities such as Chennai, or Mumbai where rains are incessant and heavy leading to engine damages from water clogging.
An Ambulance & Medical Expenses cover will be required if you don’t have health cover from your employer or have not subscribed to a personal health insurance cover. If you already have a cover, buying a similar Add-on does not provide any added advantage.
Likewise, opting for a Personal Accident Add-on will be beneficial if you don’t have an Accidental Insurance Policy. Otherwise, it is essentially duplication that can best be avoided.
It is highly recommended to go for Car Insurance Add-On Covers if you are a beginner with limited driving experience.
It is recommended to go for Add-ons in the event, your work-profile requires you to travel extensively and if you are using your own vehicle to do so.
In the event, the stretch you travel is accident-prone, it is advisable to insulate yourself from a higher probability of getting involved in an accident.
Spares of certain vehicles are generally more expensive, even if they belong to the same category – i.e. the spares of one hatchback car may be much more expensive than that of the other car in the same category. In such cases, it may be advisable to de-risk yourself and go for a higher cover.
Generally speaking, if the cost of your vehicle or the cost of servicing your vehicle is high, it is a good idea to minimize your risks. Again, you will have to evaluate your options against the costs and potential risks and take an informed call based on the factors discussed here and others that might apply in your individual case.