When buying a motor insurance policy, one must look at a comprehensive policy along with add-on covers such as zero depreciation, engine cover,.vehicle replacement, roadside assistance and towing, etc. These optional add-on covers will cover those elements which are excluded from the policy.
A comprehensive motor insurance will cover own-damage as well as the mandatory third-party insurance. Third-party insurance only covers the damage done by one’s insured vehicle to other vehicles or property and people and the rates are fixed by the Insurance Regulatory and Development Authority of India (Irdai). A comprehensive insurance cover will cover damage to the car due to an accident and accidental death or disability of the owner-cum-driver of the insured vehicle. If the vehicle is stolen, the insurer will pay the entire Insured Declared Value (IDV) of the vehicle. Insurers fix the IDV of the vehicle every year at the time of the renewal of the policy based on the year of manufacturing, selling price of the brand and the model and depreciation of the vehicle. A comprehensive car insurance will cover damages due to natural calamities, fire and acts of vandalism.
An individual must opt for add-on covers along with the comprehensive car insurance policy. Zero depreciation cover is the most popular add-on cover in which the policyholder gets the full claim on the value of parts such as plastic items, fibre, rubber, windscreen etc due to accident. Most insurers offer zero depreciation riders for the first five years with an extra premium.
In fact, every year the value of the car depreciates due to wear and tear. The depreciation ranges from 5% in the zero to six months period to 50% for vehicles above 10 years. Moreover, in case of an accident, insurers pay for replacement of parts after deducting the depreciation and the policyholder has to pay for the difference between the value of the new parts and the depreciated value. In case of a zero-depreciation add-on cover, the insurer will pay the entire amount of the damaged parts.
An engine add-on cover will protect the car’s engine in case of flooding as hydro-static lock is a major cause of engine failure. This add-on cover will help the policyholder to get indemnified against expenses for electrical breakdown of the engine due to water ingression. A return to invoice add-on cover will help the insured to get the full invoice price of your vehicle if it is damaged (total loss) due to an accident or theft. In break-down assistance add-on cover, the insured will get roadside assistance and towing facilities. Add-on covers are not expensive and it is good to go for some of them to protect your expensive vehicle.