While the insurance regulator has reduced the premium rates for motor third-party (TP) insurance for 2018-19, policyholders should look at a comprehensive cover which takes care of the own damage portion, especially loss or damage due to fire, explosion, accidents or while in transit by road or rail, and even burglary and theft. Additionally, they should opt for a few essential riders which have distinct advantages. From this month, the mandatory third-party premium for cars with engine capacity of less than 1,000 cc has been reduce from Rs 2,055 to Rs 1,850. However, there has been no change in the existing rate for cars with engine capacity higher than 1,000 cc. Similarly, the premium on two-wheelers with less than 75 cc engine has been lowered from Rs 569 to Rs 427. However, the premium on two-wheelers over 350 cc has gone up from Rs 1,019 to Rs 2,323.
A comprehensive motor insurance policy covers the vehicle against any damages due to any insured perils covered under the policy. A comprehensive motor insurance cover comprises own-damage and third-party insurance. Any vehicle that plies on the road will mandatorily need a third-party cover under the Motor Vehicles Act. The third-party rates are always fixed by Insurance Regulatory and Development Authority of India (Irdai). Third-party liability, which is unlimited, is decided and awarded by the judiciary taking into account the age of deceased, earning capacity, wages, etc.
Third-party insurance only covers the damage done by one’s insured vehicle to other vehicle or property and people and does not cover accidents, theft or damage to one’s own vehicle. For vehicles which are 10-15 years old, insurance company will ask for an inspection report from a surveyor certifying the condition of the vehicle. On the basis of report the insurance company will provide a comprehensive insurance cover. With costs of repairing vehicles going up, policyholders should look at a comprehensive vehicle insurance cover. Industry experts say as the regulator has reduced the third-party premium, it makes sense to also opt for add-on covers like breakdown assistance, engine cover and zero depreciation for additional protection and minimum expenses.
Riders, which are optional add-on covers, protect from those things which are excluded and can save car owners from unnecessary vehicle-related expenses. One can take add-on covers to the basic vehicle insurance and the pricing is based on the 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.
In zero or nil depreciation cover, the policyholder will get the full claim on the value of parts such as plastic items, fibre, rubber, windscreen that are replaced in the event of loss due to accident. The unique feature of a zero depreciation cover is to extend complete protection without any co-pay options. Zero depreciation cover is only offered to vehicles with a certain threshold that considers the age and make of the vehicle. Most insurers offer zero depreciation rider for the first five years with an extra premium. However, zero depreciation also does not cover damages caused to the engine that requires repairs or replacement. Ideally, one should take a zero depreciation add-on cover for a new vehicle and renew it for up to five years along with comprehensive motor insurance plan.
Engine cover rider provides protection to the engine in case of flooding as hydro-static lock is a major cause of engine failure. Since damage due to hydrostatic lock, which happens if one repeatedly tries to run a moist engine, is not covered under a regular motor insurance policy, an add-on engine cover can be of great help. At a nominal cost, break-down assistance add-on cover will help policyholders to get instant assistance in case of breakdown or accident on the road. The policyholder will have to call up the designated helpline number of the insurer and help will reach him. It covers replacing of flat tyre, alternate battery, alternate key, towing vehicle, and even emergency fuel and alternative vehicle.