A comprehensive Motor Insurance policy comprises two parts – Own Damage and Third Party Insurance. It also comes with a range of add-on covers that can be customised.
It covers damages and losses against your own car. This includes damages and losses caused due to accidents and collisions, natural calamities, fires, riots and malicious damages, and thefts etc.
It covers you against any liability which may arise in case of any loss or damage caused to any third-party vehicle, person or property. A Third-Party Car Insurance is mandatory by the Motor Vehicles Act in India.
What is covered under a comprehensive motor insurance policy
Some additional covers that you could include to customize your comprehensive car insurance policy to ensure an exhaustive coverage for your vehicle are as follows:
- Zero Depreciation Cover – If your car is less than 5 years old, get this cover to avoid paying for the cost of depreciation during your car insurance claims.
- Roadside Assistance – It offers you emergency services such as towing your vehicle to a nearby service station, ambulance services, changing flat tyre, alternate transportation, arranging hotel accommodation, etc. It comes in handy if you happen to be stranded in a desolate place with a vehicle issue.
- Tyre Protect Cover – covers and protects for your tyres in all possible situations, apart from just an accident.
- Engine & Gearbox Cover – A car insurance policy covers damage to engine or gearbox damage only due to an accident. This add on cover will protect your engine and gearbox in all possible situations.
- Return to Invoice Cover – In case of a theft, or damages beyond repair this cover gives you back the complete invoice value of your car.
- Consumable Cover – this cover protects all your car’s other essentials such as engine oils, screws, nuts and more, regardless of any accidents.
What is NOT covered under a Comprehensive Motor Policy
One must understand the following in detail to avoid any unpleasant experience with the insurance provider in case of a claim
- Consequential Damages – These are damages that are a consequence of certain actions (whether intentional or by accident) post an uncertain event or accident. For instance, engine damage in monsoons due to hydrostatic loss is one of the most common examples of a consequential damage. Cranking up the engine post a flooding event, when your vehicle has been submerged under water. Here the loss is not a result of flooding but due to the subsequent action.
- Contributory Negligence – Any damage caused due deliberate accidental loss or violation of car manufacturers guidelines.
Some key terms that one must know that will help you read and understand your Motor Insurance Policy.
- Insured Declared Value (IDV) – It is essentially the sum insured under a motor insurance policy. It is equal to the manufacturer’s listed selling price of the car less the depreciation with age.
- No Claim Bonus (NCB) – It is a discount offered to a policyholder on the Own Damage premium at the time of insurance renewal. This benefit is provided only to customers who have not claimed in a policy year. NCB varies between 20 percent and 50 percent, based on the number of claim-free years observed.
- Compulsory Deduction – It is a part of the claim amount that you will have to pay mandatorily.
- Voluntary Deduction – It is a part of the claim payout that you can opt to bear when purchasing a policy. If you opt for a high voluntary deductible value, you can avail a considerable discount on the own damage premium.
- Network Garages – garages that are affiliated with the insurance company and offer cashless claims service to customers.
- Break in Insurance – a situation that you are face when you forget to renew your policy on time. The policy will move into lapsed status and the insurance company will renew the insurance only after an elaborate vehicle inspection.
- Endorsement – It is an update made to the coverage of a car insurance policy after its commencement. Endorsements can be premium-bearing or non-premium bearing updates.
(Chandni Arora is a Jodhpur-based writer, who writes on Insurance, culture and lifestyle.)