Car insurance policy: Tick the right boxeshttps://indianexpress.com/article/auto-travel/cars/car-insurance-policy-tick-the-right-boxes/

Car insurance policy: Tick the right boxes

With escalating spare part costs and rising natural calamities, the standard insurance cover is likely to prove inadequate and hurt your financial health.

Illustration: C R Sasikumar
Illustration: C R Sasikumar

It’s raining new car launches this year. However, while driving home the new car people often pay little attention to the car insurance they opt for. While it comes at a miniscule cost compared to the car’s price, the features of the policy one opts would be of immense value in the years to come.

Gone are the days when car repair bills would cause a dent on one’s pockets as the standard motor insurance policy would be limited to damage caused to the vehicle, within the limits of depreciated value of the vehicle, apart from the third party damage.

Today, there are additional add-on covers that can be tagged on to the regular car insurance policy and one wouldn’t face the bumper of depreciation on the road to car insurance claims. Major damages such as hydrostatic loss during floods wouldn’t be stopped by the red signal of rejection. Towing of car and additional transportation costs wouldn’t hammer down one’s wallet if one opts for some quintessential add-on covers offered in the car insurance platter.

Typically, the moment a car drives out of the showroom, the depreciation countdown begins. So, even if one were to file a claim the same day as the date of purchase, the claim value would be reduced by the specified depreciation limit applicable to various parts. It is highest (50 per cent) for plastic and rubber parts and lower (0-30/50 per cent) for fibreglass and metallic parts. The depreciation increases as the vehicle ages.

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So, if one makes a claim of Rs 40,000 for damage to a plastic part, then thanks to depreciation only Rs 20,000 would be payable under the regular comprehensive car insurance cover. But if one ticks the zero depreciation cover box while purchasing or renewing the cover then the entire Rs 40,000 would be payable, subject to two claims a year.

Imagine the plight of car owners residing in flood-prone areas, where their cars or car parts are damaged frequently. Such areas where one’s car can be submerged aren’t exactly few. As per Geological Survey of India (GSI), nearly 12.5 per cent area of the country is prone to major floods.

During the Mumbai and Chennai floods many drivers learnt a bitter truth — cranking the car engine when the vehicle is submerged causes irreparable damage. Such damages aren’t covered under the regular car insurance policy. The amount they had to bear isn’t diminutive. In some vehicles it can be as high as 20-40 per cent of the total vehicle cost. Hydrostatic loss could escalate to as much as Rs 4 lakh in a mid-segment car, while Rs 8 lakh in a high-end sedan.

Flood-water seepage not just causes damage to the exterior and interiors of the car, but even destroys the electrical circuit and various sensors. Such damages could additionally cost money ranging anywhere between Rs 1-2 lakh in smaller vehicles to Rs 3-10 lakh in luxury cars. To protect one’s financial health from such exorbitant repair costs, another add-on cover of engine protect is recommended, especially to those residing in low-lying and flood-prone areas with proximity to major water bodies.

Stressed lifestyle is forcing many to seek a fresh lease of life away from cities. If short drive-down weekend getaways are a frequent affair, one should consider the road side assistance (RSA) add-on cover. If one unfortunately rams into a situation where emergency towing or on-spot repairs are needed, then such expenses would be covered under the RSA cover. Even if the repairs aren’t possible immediately and a taxi back home is required, RSA would cover even for that.