Car Insurance – Add on Covers

Getting involved in an accident means facing an unplanned financial crunch. This is apart from the pain and suffering caused due to injuries and damage to your vehicle.   A basic car insurance policy type—the third-party liability insurance—does not provide enough coverage. In fact, even a comprehensive car insurance plan may also miss out on a few crucial liabilities.

This is when add-on covers come into the picture. Like the name suggests, add-on covers for car insurance, offer additional protection to your insured vehicle, which can help you enhance your basic car insurance policy.

You need to identify your requirement and choose the respective add-on while buying/renewing your car insurance policy. You would have to pay an extra premium for these add-ons, but in most claim circumstances, they are worth the extra buck.

Car Insurance Add-On Covers

What are they?- Add-ons are those extra covers that you buy for a better financial protection for your car during loss or damages.
- These affect your car insurance premium, since you pay extra money for such coverages.
What do they cost?- You need to pay a certain amount for every add-on. The cost is dependent on the make-model and age of your car.
The more the number of add-ons, the higher would be your premium.
Common add-ons- Zero-depreciation / Bumper-to-Bumper cover / Nil-Depreciation
- Engine protection cover
- Consumables cover
- Return to invoice
- No-claim Bonus (NCB) protection cover
Other add-ons- Loss of personal belongings
- Key replacement

Add-ons Can Be Bought for Which Type of Car Insurance Policy?

There are two types of car insurance policies – Third-party liability car insurance and Comprehensive car insurance.

It is mandatory to have a third-party car insurance policy to drive a car on Indian roads. A Comprehensive policy offers the same coverage as the Third-party policy along with many other coverage options. A comprehensive policy may be optional but is highly recommended considering the wider coverage it offers.

Remember: You can buy add-ons only with a Comprehensive policy, and not with a Third-party car insurance.

Let us see how add-ons can be your saviour during difficult times.

Say, you have a car that you bought three years ago for Rs. 5 lakh.

You car insurance policy is in place and you are driving your kids to school.

However, in an unfortunate moment, your car bumps into a tree.

It needs repairs worth Rs. 50,000.

Here’s how Add-on covers help you:

Zero Depreciation

  • A comprehensive car insurance plan deducts the depreciation value of car parts like metal, fiberglass, wood etc. The remaining amount is paid for the repairs.
  • Now, if you have a bumper-to-bumper/zero-depreciation cover, you do not have to worry about the depreciation cost getting deducted from the claim amount.
  • Without a Zero Depreciation Cover if the combined depreciation on various car parts was Rs. 14,700, then the insurer will not pay this amount out of the total repair bill of Rs. 50,000. Your claim will get settled for approximately Rs. 35,300.
  • But with Zero Depreciation add-on, the depreciation would be paid for by the insurance company i.e. approx. Rs. 50,000 in this example.
  • However, remember that most insurance companies allow only two claims in one policy year under the ‘zero depreciation’ add-on cover.

Consumables Cover

  • During repairs, minor components like lubricant, nuts & bolts, etc. are also refilled/replaced. These are called consumables and are added to your repair cost. However, with a basic car insurance policy, these consumables are not paid for by your insurance company. You need to pay for these from your pocket.
  • So, let’s say in this example, the consumables costed you Rs. 4,000. With a consumable cover, you do not have to pay for these costs from your pocket.
  • This add-on pays for the cost of consumables required to be refilled or replaced because of the accident.
  • It covers consumables like engine oil, gear oil, nuts and bolts, lubricants and similar items except for fuel.

Engine Protection Cover

  • Suppose, the collision damages your engine too. The garage estimated the engine repairs at Rs. 35,000.
  • Neither a third-party policy nor a comprehensive policy pays for such repairs.
  • But, with an Engine Protection add-on, you do not have to bear this cost.
  • Not just in the case of accidents, this add-on cover pays for the engine repairs even if the damage is due to natural calamities,  for example, flood.

Return To Invoice

  • Let’s say your car is completely damaged because of a storm. The insurer will pay a sum equal to the Insured Declared Value (IDV) after taking into account some deductions. This amount, however, is not equal to the amount you paid to buy the car, i.e. the invoice amount.
  • With the Return To Invoice cover, you can claim the original value of your car.
  • Your insurer also pays for the car registration charges and the road tax that you paid at the time of purchase.
  • But remember, such an add-on is usually offered in case of brand new cars.

Loss Of Personal Belongings

  • Accidents don’t just affect the car, but even what’s kept inside the car. And this could mean belongings like a laptop, smartphone, etc. This can be a significant amount of loss—both laptops and smartphones can cost over Rs. 50,000 each!
  • However, the insurer does not pay for this loss usually, irrespective of you having a third-party plan or a comprehensive car insurance plan.
  • You need a separate add-on to cover the personal belongings that you lose in an accident. The terms and conditions of such an add-on vary from one insurer to another.

Key Replacement

  • Accidents can be minor or major.
  • It may be as major as your car bumping into a tree or as minor as your car key falling out of your pocket!
  • Replacing this key can be quite a challenge, especially since they come inbuilt with batteries and other advance features.
  • With the Key Replacement add-on, you can make a claim for such a loss. It covers the cost of replacing the car keys.
  • If you need to replace the lock, this add-on pays for that as well.

NCB Protector

  • You get a No-claim Bonus (NCB) if you do not make any claims during a policy year.
  • This bonus is in the form of discounts on your premium. It can go up to 50% of the premium amount.
  • Let’s say, you make a claim for Rs 10,000 during the year. This may be your first claim. But you will no longer be entitled to a No Claim Bonus.
  • If you have NCB protector addon, you will be entitled to a bonus even after making a claim. It allows a maximum of two claims in a year.

*To easily explain the calculations, we have not deducted the compulsory deductible of Rs. 1,000.

Add-on covers provide an extra layer of protection to your base policy. Choosing the right add-on depends on your personal requirements. It is important to enhance your car insurance policy to be on a safer side.