Car Insurance

Bumper to Bumper Insurance Policy for Your Car

By Admin
Feb 24, 2021
bumper to bumper car insurance policy

Your new car is like a carefully sculpted piece of art. You want to offer it all the care and protection in the world. This is why you are in search of a car policy that does just that. The standard car policies do not seem to make the cut, as they fall short of your expectations. 

The words ‘bumper to bumper insurance policy’ grab your attention and this just might be what you have been looking for all this while – comprehensive, reasonable protection for your most treasured possession!

Let’s learn what bumper to bumper car insurance policy is and how it can benefit you!

What is a bumper-to-bumper insurance policy?

Identified as the most comprehensive car insurance policy in the market, bumper-to-bumper, insurance covers 100% of damages caused to the fibre, metal and rubber parts of the car. It is also known as nil depreciation or zero depreciation car insurance. However, there are limitations on the number of claims that can be made in a particular year.

How does car depreciation impact your financials?

Like all other machines, your automobile will undergo some wear and tear with the passage of time. Standard policies deduct the wear and tear costs prior to making final settlements of the claim amount. The zero depreciation add-on, which covers even these costs, offered in a bumper-to-bumper policy, makes it far more advantageous than a standard motor insurance policy. But this is not devoid of a price – a higher premium is to be paid by the policyholder (the cost will be nearly 20% to 30% higher than a no-frills comprehensive insurance policy).

What are the inclusions in a bumper-to-bumper car insurance policy?

This insurance policy offers the following cover –

  1. All kinds of bodily damage to the car – all body parts made of metal, fibreglass, nylon, plastic, and rubber are encompassed;
  2. Some insurance companies offer coverage for emergency transportation, towing assistance, regular maintenance, etc.

What are the exclusions?

A bumper to bumper policy does not cover the following –

  1. Engine damages caused due to fuel or water ingression;
  2. Batteries and tyres;
  3. Gas kits, bi-fuel kit, consumables, and mechanical breakdown of the car;
  4. Vehicles that are more than 5 years old.

Other standard exclusionary clauses are –

  1. Damage to uninsured peril;
  2. Delay in claim intimation;
  3. Damages caused when the car has been driven under the influence of alcohol;
  4. Damages caused when the car has been driven in the absence of a valid driver’s license;
  5. Damages caused are not a direct consequence of the accident;
  6. If the insurer is of the belief that the information provided in the application was inaccurate, false, or fraudulent.

Is it worth getting a bumper-to-bumper insurance policy for your car?

A careful cost-benefit analysis is to be made prior to the purchase of the policy. Experts say that it would entirely depend on three factors – the needs of the car owner, the overall benefit that the policy would provide, and the make and model of the car in question. Moreover, If you bought a new car or driving a high-end car, it is recommended to opt for such a policy. However, if your car is older than 5 years, then most insurers won’t offer you a bumper-to-bumper car policy.

Advantages and disadvantages of a bumper-to-bumper car insurance policy?

Advantages

Disadvantages

Full compensation for the damage suffered at the time of final settlement, including for depreciable parts.

Some insurance companies offer coverage for key replacements, roadside assistance, towing assistance, regular maintenance etc.

 

The premium amount is higher than the standard comprehensive car insurance policies.

There is a cap on the number of claims that can be filed in a year, which is set as 2 times in a year. However, it may differ from insurer to insurer.

How does a bumper-to-bumper insurance policy compare against a comprehensive policy?

Criteria

Bumper to bumper policy

Comprehensive policy

Cover

Including the coverage provided by the standard comprehensive car insurance, it provides for the cost of repairs for damages caused to the fibre, metal, and rubber parts of the car without depreciation costs being deducted.

Offers coverage for eventualities such as own-car damage, theft, damage caused to third parties, riot damage, arson or vandalism, natural disasters etc.

Claim amount

The full value of the claim amount will be paid.

Paid on the basis of the current market valuation adjusted for depreciation.

Premium amount

A higher premium is paid. This is usually 20 – 30% higher than a no-frills comprehensive cover.

Premium paid is comparatively lesser.

Limit on the number of claims in the term

Usually a cap of 2 times is placed for making claims.

No such limit exists.

Example (figures might not reflect actual amounts)

Roshni purchased a bumper-to-bumper policy and would promptly pay a premium of INR 20,000 per annum. She wants to make a claim of INR. 40,000 for the damages that her 3-year-old car has suffered in an accident. The insurer informs her that the entire claim amount will be processed shortly, with no deductions for depreciation.

Reema purchased a comprehensive car insurance policy and would promptly pay a premium of INR 16,000 per annum. She wants to make a claim of INR 40,000 for the damages that her 3-year-old car has suffered in an accident. The insurer informs her that 45% of the claim amount will be processed shortly, with deductions for depreciation.

Who is bumper-to-bumper car policy beneficial for?

It would not be incorrect to state that it would provide the maximum benefit to all those individuals who own a luxury car or have cars with expensive spare parts. It would also be very beneficial for those who drive their cars in accident-prone areas or are new/ inexperienced drivers, as opposed to others who are not. Bumper-to-bumper car insurance is preferred by owners who are fastidious even about small dents on their cars. Even car owners who hire drivers to use the car regularly would prefer this insurance cover.

Summary

Opting for a bumper-to-bumper insurance cover may add to your peace of mind. But it is imperative that one considers (since it is a question of shelling out considerable amounts of savings) if this policy is really a necessity or is it just comfort with little functional value that sounds like a good choice to make because insurance agents and market trends say so. There are no definitive means of making this decision, but it requires careful consideration of pros and cons weighed in monetary terms!

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