Auto insurance: Add-on covers

Written by Adhil Shetty | Updated: Dec 24 2013, 14:38pm hrs
Auto insuranceAdditional covers not only bring in several benefits, but also ensure peace of mind (AP)
Auto insurance is integral to owning a vehicle. While some think of it as a recurring annual expenditure, there are various auto insurance add-ons that provide the user multifold benefits in terms of increasing the cover for the vehicle as well as its owner.

In this day and age of growing needs, various external factors affect vehicle owners directly or indirectly. As a result, a general car insurance is not always adequate and add-ons become essential. Here is a list of some common add-ons offered by various auto insurance companies today.

Zero depreciation

This is one of the most widely used add-on covers sold by auto insurers. Unlike other add-ons that are popular in just the high-end segment, zero deprecation is popular across segments. A zero depreciation add-on policy ensures that one can receive a full claim on the value of parts replaced after an accident.

Insurance companies usually offer this add-on for only three years from the date of purchase of the vehicle. The older a vehicle gets, the higher is the premium for this add-on policy. Getting the full claim, without any depreciation on bumpers and other such parts that are replaced after any accident, is a win-win situation for both the consumer and the insurer.

Quick road assistance

This add-on enables basic services in case of an emergency while one is driving through a remote location or an area devoid of any assistance or service centres. From a flat tyre and empty tank to battery- related issues and accidents, almost everything is covered under this policy. Users opting for this add-on can avail fuel assistance, taxi and accommodation benefits when stuck in a remote destination.

Engine and electronic circuit cover

As the name suggests, this add-on offers protection against the engine and the electronic circuit, especially in case of flooding. Hydrolocking or repeatedly trying to run a moist engine is one of the major causes of engine failure. Such damage is not covered by a normal motor insurance policy. A dedicated electronic and engine cover add-on is the best way to avoid massive cost repairs and replacement of circuits, which get easily damaged and cost a fortune. With water-logging in the rainy season common across India, this add-on can come in really handy.

Return to invoice

With this add-on, the user can get back the full value of the car if it gets totally damaged because of an accident or other reasons. The advantage of this add-on is that the user gets full reimbursement, without the 5% depreciation. The downside: This add-on is usually available only in the first year of buying a vehicle.

No-claim bonus (NCB) retention

This add-on acts like a reward for not making any insurance claim in the last few years. People usually buy car insurance and renew it each year without actually making any claims. The NCB acts as a reward policy by offering discounts up to 50%. Without the no-claim bonus or NCB add-on, even a single claim can bring down the discount to zero, but the NCB add-on allows for discounted protection even after availing a past claim.

Personal accident cover

This add-on can include the owner, the paid driver, or both depending on the insurance company. In case of an owner- driver, a person is entitled to a 100% claim for death or permanent loss of limbs. The downside is that a personal accident cover is not provided if the vehicle is owned by a company, or if the owner does not hold a valid driving licence.

In case of multiple vehicles owned by the same person, the add-on is provided for only one vehicle.

Loss of personal belongings

This add-on allows users to claim any theft or apparent loss of personal belongings, including laptops and electronic equipment, from a locked vehicle. Insurance companies offer a wide range of personal belonging loss claims, which can go up to R50,000.

The writer is CEO,