Add on Covers

There is much more to an accident than just damages and injuries. However, a basic car insurance type—the third-party liability insurance—does not cover these liabilities completely. In fact, even a comprehensive car insurance plan also misses out on a few crucial liabilities.

This is when add-on covers come into the picture. Like the name suggests, add-on covers in car insurance offer additional protection to your insured vehicle, over and above your base policy.

All you need to do is identify your requirement, and choose the add-on while renewing insurance. 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 and damages.
- These affect your insurance premium since you pay extra 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 are 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

When Can You Buy Add-Ons?

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

It is mandatory to have a third-party 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. The 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 Deprecation

  • A comprehensive car insurance plan deducts the depreciation value of car parts like metal, fibre glass, wood etc. The remaining amount is paid for the repairs.
  • Now, if you have a bumper-to-bumper or a zero-depreciation cover, you do not have to worry about the depreciation cost.
  • So out of the repairs, 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.
  • With zero depreciation add-on, the depreciation would be paid for by the insurance company.
  • However, remember, most insurance policies only allow two claims in a year under the ‘zero depreciation’ cover.

Consumables Cover

  • During repairs, things like lubricant, nuts and bolts are also required. These are called consumables and are added to your repair cost. However, with a basic car insurance cover, these consumables are not paid for by your insurance company.
  • 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 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 cover nor a comprehensive cover 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 causes like 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 get the original value of your car.
  • Your insurer also pays for the car registration charges and the road tax that you paid.
  • But remember, such an add-on is usually offered in the first year of buying the car.

Loss Of Personal Belongings

  • Accidents don’t just affect the car, but even what’s in 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 whether you have a third-party plan or a comprehensive car insurance cover.
  • 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 big or small.
  • It may be as big as your car bumping into a tree or your car keys falling out of your pocket!
  • Replacing this key can be quite a challenge, especially since they come with inbuilt batteries and other features.
  • With the key replacement add-on, you can make a claim for such a loss. It covers the cost of replacing the 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 the 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 bonus.
  • If you have an NCB protector, you will be entitled to a bonus. 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.

It is better to be safe than sorry; add-ons keep you on the safer side.