Home / Car Insurance / Articles / Most Underrated Add-Ons You Should Opt for With Your Motor Vehicle Insurance
Team AckoApr 12, 2023
Accidents happen when you least expect them. Depending on how severe it is, you can get away with a few minor scratches that will buff out or wreck your vehicle entirely. The latter can leave you with a hefty bill from the mechanic. This is where motor-vehicle insurance comes in.
In India, the Motor Vehicles Act mandates that every vehicle in the country should have a valid motor insurance policy. Most usually go in for third-party insurance because its premiums are the lowest. This policy is also widely opted for due to the lack of awareness about other insurance policies, and how they can protect you in a wider variety of circumstances.
Let's look into motor insurance policies in a little more detail.
When it comes to motor vehicle insurance policies in India, there are two primary types.
This is the primary legal requirement for driving a vehicle in the country. Third-party insurance, as the name implies, protects its owner from any financial liabilities that may arise if you injure or cause damage to a third party. The third party could be another person, their property, or their vehicle.
Most people choose this policy because they are unaware of the existence of comprehensive insurance or because of the low premiums. An important point to note about third-party insurance is that damages sustained by your own vehicle are not covered.
Comprehensive car insurance will not only protect the owner from financial liabilities in the event of damage to a third party but will also cover any damages to their own vehicle. The owner is also protected if their vehicle is stolen or damaged due to natural or man-made disasters. The most significant advantage of comprehensive insurance over third-party insurance is personal accident coverage for the policyholder. Comprehensive insurance does come with higher premiums, but the policy makes up for it in huge monetary benefits in the event of an accident.
Comprehensive insurance policies are definitely a step up from third-party insurance, but it still does not cover everything. These gaps can be covered by what are called add-ons to your motor vehicle insurance policy. Let's look at three in particular that can benefit you greatly if your vehicle suffers serious damage.
Simply put, add-ons offer additional coverage for your car insurance policy. They do increase your premiums, but the benefits they offer can help you save a lot in the event you have to make an insurance claim.
Here are three that do just that.
All vehicles undergo wear and tear over time, and as a result of this, the value of the vehicle also drops. This drop in value is essentially what counts as Depreciation.
No matter how careful a driver you are and how well-maintained your vehicle is, the percentage of Depreciation is calculated based on the vehicle's age and on the various materials the components are made up of. The percentage of Depreciation calculated based on the age of the vehicle has been elaborated below.
Age of the Vehicle
% of Depreciation Applied
Up To 6 months
6 months to less than a year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
The percentage of Depreciation calculated based on the various components of a vehicle is as follows:
% of Depreciation Applied
Nylon, rubber and plastics
As you can see, no matter the condition of your vehicle, the value of the vehicle is going to depreciate based on the above calculations. Whenever you make a claim, the final amount you are compensated with is calculated after deducting the Depreciation on your vehicle. So, the older the vehicle, the lesser the compensation will be.
You can completely eliminate these losses in your insurance coverage by going in for a Zero-Depreciation add-on. With this added to your insurance policy, deductions due to Depreciation no longer apply.
One point to note is that this add-on is not available for vehicles that are more than five years old. If you own an expensive vehicle or are an inexperienced driver, this add-on will be highly beneficial for you.
Consider these two scenarios, your vehicle has been stolen or has been damaged so badly that it is declared a write-off. If you do not have the Return to Invoice Cover, you are only eligible to be compensated for the current Insurance Declared Value (IDV) of your vehicle. In case you are unfamiliar with the term, the Insured Declared Value of your vehicle is derived by subtracting the depreciation factor from the ex-showroom price of your vehicle.
In the previous section, we listed how Depreciation was calculated based on the age of the vehicle. If we were to do a quick calculation, the IDV of a vehicle that is just under two years old is calculated as:
Ex-showroom price - 20% = IDV
If the ex-showroom price of your vehicle was 10 lakhs, the IDV of your vehicle is now 8 lakhs. That means that your vehicle's value has depreciated by 2 lakhs. If you were to file a claim now, you would have suffered a loss of 2 lakhs due to Depreciation.
This is where the Return to Invoice cover comes to the rescue. With this add-on as a part of your motor vehicle insurance policy, you will be compensated for the value of the vehicle as mentioned in the invoice of the vehicle. The more expensive your vehicle is, the higher the benefits of adding this to your motor vehicle insurance policy.
The Roadside Assistance Cover (RSA) is probably the most underrated of the three. While the previous two add-ons only come into the picture when you suffer a major event, this add-on comes to the rescue when you suffer minor breakdowns or even for something as simple as leaving your key inside the vehicle.
A few scenarios that an RSA can help you with are:
Mechanical Breakdowns: In the event of a mechanical breakdown that cannot be fixed on-site, the insurer will arrange to have your car towed to the closest cashless garage or authorised service centre
Emergency Fuel: If your vehicle runs out of fuel in the middle of nowhere, the insurer will deliver up to 5 litres of fuel to your location. You will, however, have to pay for the fuel.
A dead Battery: If your vehicle has a dead battery and is unable to start, a mechanic will be sent to you and help you jump-start your vehicle.
A Flat tyre: If you have a flat tyre and don't have a spare or don't know how to change a tyre, the insurer will send a mechanic to help you out.
As you can see, the RSA add-on can help you in situations that will otherwise leave you stranded in the middle of nowhere.
Motor vehicle insurance is mandatory for a reason. It protects you financially when things happen out of the blue. Yes, third-party insurance is all you need to be able to drive legally, but why leave yourself open to massive losses that you know you could have prevented by opting in for better coverage? The above add-ons make sure that you do not have to suffer any losses, even in the worst of situations. ACKO has great motor-vehicle insurance plans and all of the add-ons mentioned above to go along with them at very affordable rates.
A zero-dep add-on will raise your premiums by approximately 15%. All things considered, this small increase can pay you back 10-fold in the event you file a zero-dep claim.
No, the RTI claim only applies against the total loss of the insured vehicle, i.e., if it is damaged beyond repair in the event of an accident, due to a natural disaster, or has been stolen.
The RTI add-on is only applicable to vehicles that are less than 5 years old.
You can expect a rise of about 10% in your premiums with the Return to Invoice add-on.
To get the RSA, you will have to upgrade to Comprehensive insurance and then opt-in for RoadSide Assistance. You can make the switch to a comprehensive policy when you want to renew your motor vehicle insurance policy.
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