Car Insurance Add-on Covers

A balanced diet is necessary for good health. But is there an ideal diet for your car? There is—car insurance add-ons for longevity and to deal with risks. These are special covers over and above the insurance package or comprehensive car insurance that you ‘add on’ to instantly transform it into an 'uber-premium package.' 

What is a Car Add-on Cover?

The additional coverage bought by paying extra premium, which increases the vehicle’s protection and is applicable in certain specific circumstances. Add-on covers are only available with comprehensive or standalone own-damage car insurance policies, and not third-party policies that only cover injuries or damages to third parties and not to the insured car. Since the comprehensive and stand-alone car insurance policy protects a car financially, add-on coverage that includes own-damage coverage is only logical. 

Types of Add-on Covers:

Add-on  provides coverage for a variety of damages or events the potential to save you a significant amount of money. In India, car insurance policies come with varied options:

• Zero Depreciation Add-on:

After an accident, the car owner is responsible for the depreciation and replacement of new spare parts. The insurance company can foot this expense if you buy the Nil or Zero Depreciation Add-on, which covers repairs and replacing the vehicle's rubber, plastic, and fibre components. This option is available for cars not older than five years.

• Consumables Add-on:

Certain consumable parts or substances (nuts, bolts, pipes, engine oil, etc.) are used to repair cars, and an insurance policy will not cover these expenses. With the Consumables Add-on, you transfer that risk to your insurance provider. This works best when combined with comprehensive car insurance and a zero-depreciation add-on for adequate coverage. 

• Engine Protect Add-on:

A comprehensive car insurance policy does not cover the vehicle’s engine. You insurance company will pick up the costs if you have an engine protection cover. Most companies offer this if a car is less than five years old. You can only make two claims in a policy year. Furthermore, if your engine was damaged due to a subsequent event such as oil leakage, your insurance company would not cover the repairs. Engine Protect works best when combined with a Zero-Depreciation Add-on wherein the company covers the engine repairs and the cost of depreciated parts.

• Roadside Assistance Add-on:

This helps you if you need assistance with your car on the road—getting your wheels fixed to towing or taxi service. Roadside Assistance is usually provided to cover the holder stranded within a 500-kilometre radius of the city centre.

• Return to Invoice Add-on:

In extreme cases like a car being damaged beyond repair, the insurer will pay the full value of the vehicle without taking into account the depreciation percentage. Hence, at the time of claim settlement, the policyholder gets the compensation amount sames as mentioned on the invoice bill of the car. 

• NCB Protect Add-on:

No Claim Bonus (NCB) gives you a discount on your own-damage premium for every claim-free year. Even if you file a claim, it allows you to make a set number of insurance claims without losing your bonus during the term. So, if you have a major accident, you can file a car insurance claim and keep your No Claim Bonus intact! 

• Tyre Damage Add-on:

Tyres are subjected to a lot of abuse and tyre protection insurance helps because modern tyres aren't cheap. This covers damages such as bursting or puncture, in-tyre bulges, cuts due to an accident, etc.

• Key Replacement Add-on:

Remote keys cost anywhere between INR 5,000-10,000. Losing a key requires replacing the whole set or reconfiguring it with new ones. This add-on covers a part of the cost if the keys are lost, stolen, or damaged, and lock replacement if necessary.

• Passenger Cover:

This covers your companion and provides them financial assistance while recovering from an accident. The maximum sum assured is typically Rs 1 lakh per insured, but varies from insurer to insurer.

• Loss of Personal Belongings Add-on:

If your car is stolen with your belongings (any valuables) or just the belongings are stolen, you can file a claim within a certain limit.  

• The Daily Allowance Add-on:

If your car is stolen, or being repaired, this covers the replacement vehicle’s rent. The amount could range from INR 100-500 per day and is given out for 10-15 days. Depending on the terms and conditions, it may be subject to exclusions such as not repairing at an authorised garage or for less than three days.

Choosing the Right Add-on:

If your vehicle is new or driven frequently, comprehensive coverage will protect you from accidental damage and flood, fire, or theft. When comprehensive policy falls short, add-ons help. You do not require all the add-ons,  Zero Depreciation, Engine Protect, Consumables, Roadside Assistance and NCB are beneficial in all situations. Let’s say if you bought an expensive car, if you are an unexperienced/new driver, or you live in accidental/flood-prone area, going for these add-ons would be an ideal choice to make.

How Can I Opt for Car Insurance Add-on Cover?

For acquiring a car insurance policy with add-on covers:

1. Select an appropriate standalone or comprehensive car insurance policy to include add-on covers
2. Choose appropriate add-on covers that you will use as each increases your premium cost.
3. Select a reputed insurer. Focus on its:

• Market reputation
• CSR (Claim Settlement Ratio)—the higher the better
• Customer support
• Ease of process for filing claim
• Availability of cashless garage network

1. Compare the policies as per their benefits and features, premium, coverage, add-on packages and inclusions and exclusions.
2. Double-check the policy documents. Some insurers also provide a free look period or the span of time you have to read the documents and decide to keep the policy or not. Do not miss the fine print!
3. Provide your and your car’s basic information. When purchasing or renewing insurance online, you no longer need to submit documents. However, keep your RC book, driver's licence, and car's original invoice handy.
4. Complete the policy premium payment through debit/credit card, UPI or online banking.
5. Within minutes, you’ll receive a digital copy of your insurance on your verified e-mail id. Double-check it for any inconsistencies.

Checklist Before Buying a Car Insurance Policy with Add-ons:

• Exclusions:

The insurance cover will not be available in these situations—wear and tear, breakdowns, consequential loss, and driving with invalid DL or under the influence of alcohol.

• NCB (No Claim Bonus):

Understand your insurer's NCB policy. The insured vehicle is eligible for a discount at the time of policy renewal if no claims are filed during the last policy term. 

• IDV:

The maximum amount that can be claimed under a policy is called the Insured Declared Value (IDV). It varies from vehicle to vehicle. A new car will have a higher IDV. 

• Voluntary deductibles:

When a claim is made, the insured can volunteer to pay a certain amount. The premium may be reduced if you are willing to share the risk of insuring the vehicle. Think about your financial situation before volunteering.

• The claim settlement ratio:

This ratio represents the number of claims settled by the company versus the total number of claims received in a year. Look for a policy with more than 90% CSR. A low ratio indicates unresolved insurance claims and a time-consuming settlement process. 

Add-on covers act as an extra layer of protection against unfavourable situations. You should carefully assess your insurance needs and select add-on coverage based on your specific needs.