Table of Contents
Introduction:
Choosing the cheapest car insurance policy might save you some money upfront. However, it could cost you more in the long run if you don’t familiarize yourself with all the available Motor Insurance Add-On Covers. In this article, we’ll explore some of the most common Motor Insurance Add-On Covers so that you can make an informed decision when renewing your car insurance.
What are common Motor Insurance Add-On Covers?
Numerous general insurance companies in India offer a wide range of Motor Insurance Add-On Covers. Here are a few examples.
Zero Depreciation
Also known as ‘Nil Depreciation‘ or ‘Bumper-to-Bumper‘ cover, this motor insurance add-on cover provides complete cover for any car parts excluding tyres and batteries. The insurer will pay the entire cost of body parts, regardless of the yearly depreciation of these parts.
This add-on cover is usually offered for newer cars.
Please note that your premium will increase by 30%-40%.
Engine Protection Cover
This motor insurance add-on covers the damage to the internal child parts of the engine and/or gearbox of the insured vehicle that results from Water ingression, Leakage of lubricating oil, and/or damage to the engine and/or gearbox of the insured vehicle arising out of leakage of lubricating oil due to Accidental means. Under this motor insurance add-on cover, the insurer will compensate the insured for the following:
- Repair or replacement of the internal child parts of the engine such as pistons, piston rings, piston pins, connecting rods, crankshaft, valves, valve seat/guides, nuts & bolts related to engine assembly, engine oil, gasket, sealant, and cylinder head.
- Repair or replacement of the internal parts of the gearbox, such as gears or shafts in the gearbox housing, bearings, gear oil, and gaskets.
- Labor cost incurred by the insured to overhaul the damaged engine and/or gearbox.
- Engine cylinder re-boring, compression tests & other machining charges.
Please note that your premium will increase by 7%-10%.
NCB Protector
NCB Protector helps you retain your NCB (No Claim Bonus) even if you have to make a claim. Hence, if you have a high No Claim Bonus, it is advised to get this motor insurance add-on cover. NCB Protector covers claims resulting from the following:
- Loss/accidental damage to only Windshield Glass by an external object
- Loss/damage to Parked Vehicle due to accidental external means
- Loss/damage to a Parked Vehicle due to flood/earthquake/AoG perils
This benefit only applies when you renew with the same insurer next year. In most cases, the number of NCB claims is limited to 3 during the policy period.
Please note that your premium will increase by 2-3K
Consumables Benefit
This motor insurance add-on covers expenses for consumable items damaged due to an insured event. This includes damage to the vehicle and/or its accessories (if insured).
Consumable items are those used up or become unusable after a certain amount of use. These items may include but are not limited to nuts, bolts, screws, washers, grease, coolants, lubricants, engine and other oils, clips, AC gas, bearings, battery water, filters, sealants, and gaskets.
Note that claims for consumable items will only be considered if the own damage claim under the policy is admissible and payable.
Return to Invoice
The Return to Invoice is a great way to get your money back if your car is stolen or declared a total loss. This motor insurance add-on covers the original invoice value of your vehicle, as well as the registration charges and road tax costs. Return to Invoice usually only applies within the first year of buying the vehicle.
This motor insurance add-on cover excludes the following:
- In case of theft, the stolen vehicle is recovered within 90 days of theft.
- The police authorities have not issued a final investigation report regarding a theft claim.
24*7 Roadside Assistance
By opting for this motor insurance add-on cover, the insurer will provide the following services if your insured vehicle becomes disabled or immobilized due to loss or damage:
- Minor repairs on the accident spot
- Towing assistance for accidents and breakdown
- Flat tyre repair
- Emergency fuel delivery
- Vehicle key service
- Alternate travel arrangement
- Accommodation arrangement
- Ambulance referral
- Medical evacuation
- Legal services assistance
- Battery jump start service
- Vehicle repatriation service
- Continuation/Return journey
- Translator service
By adding this motor insurance add-on cover, you can expect your premium to increase by ₹300-₹500, depending on the insurer.
Key and Lock Replacement
Key Replacement insurance covers the cost of replacing your vehicle key if it is lost/stolen/misplaced, or damaged. If you need to replace your car’s locks, that cost will also be covered under this motor insurance add-on cover.
PA Owner Driver
Compulsory Personal Accident is a motor insurance add-on cover which offers insurance to the vehicle owner with a valid driver’s license.
The company will pay compensation as per the following scale for bodily injury/death sustained by the owner-driver of the vehicle in direct connection with the vehicle insured or while driving or mounting into/dismounting from the vehicle insured or while traveling in it as a co-driver, caused by violent, accidental external and visible means which independent of any other cause shall within six calendar months of such injury result in:
| Nature of injury | Scale of Compensation |
| Death | 100% |
| Loss of two limbs or sight of two eyes or one limb and sight of one eye | 100% |
| Loss of one limb or sight of one eye | 50% |
| Permanent total disablement from injuries other than those named above | 100% |
Provided always that:
A. compensation shall be payable under only one of the items (i) to (iv) above in respect of the owner-driver arising out of any one occurrence, and the total liability of the insurer shall not, in the aggregate, exceed the sum of ₹15,00,000 during any one period of insurance.
B. no compensation shall be payable in respect of death or bodily injury directly or indirectly wholly or in part arising or resulting from or traceable to (1) intentional self-injury suicide or attempted suicide physical defect or infirmity or (2) an accident happening while such person is under the influence of intoxicating liquor or drugs.
C. Such compensation shall be payable directly to the insured or to his/her legal representatives, whose receipt shall be the total discharge in respect of the injury to the insured.
This motor insurance add-on cover is subject to:
(a) the owner-driver is the registered owner of the vehicle insured herein;
(b) the owner-driver is the insured named in this policy.
(c) the owner-driver holds an effective driving license, in accordance with the provisions of Rule 3 of the Central Motor Vehicles Rules, 1989, at the time of the accident.
Paid Driver Legal Liability
If your employed driver is harmed while driving your vehicle, this motor insurance add-on cover will provide compensation. It costs less than ₹100, and payments are made in the case of death or disability.
PA Paid Driver
You can opt for this motor insurance add-on cover for a paid vehicle driver for a nominal premium.
Passenger PA Cover
This motor insurance add-on covers everyone on board in case of an accident resulting in death and disability.
Depending on the insurer, this coverage can add an additional ₹300 premium.
Daily Allowance
If your car needs to be in the shop for repairs for more than three days, this motor insurance add-on cover provides you with a daily allowance for alternative transportation. This benefit is available for a certain number of days each policy year.
Tyre Secure
This motor insurance add-on cover reimburses you for any accidental loss or damage to your tyres or tubes that may require repair or replacement.
RIM Damage Cover
This motor insurance add-on covers the cost of repairing or replacing physically damaged or warped rims. This includes labor charges and the cost of the replacement rim.
Loss of Personal Belongings
This motor insurance add-on cover provides reimbursement for loss of baggage or damage to personal belongings kept in the insured vehicle caused by the insured perils covered in the policy. You can use this cover without any effect on the No Claim Bonus of your policy if there is no claim made for Own Damage.
Personal Belongings shall include:
- Articles generally carried or worn such as Clothing, Luggage, and equipment used for professional or recreational purposes like Golf Kits or Cricket Kits and articles of similar nature.
- Mobile phones, Tablets, and Laptop
- Driving license, Registration Certificate issued by concerned Transport Offices in India But excluding Valuables, Electronic Items, Works of Art, Paintings, Curios, and goods carried for trade purposes.
Secure Towing
If you have this motor insurance add-on cover and your vehicle is disabled due to a covered loss, the insurer will pay for the reasonable cost of removing the damaged vehicle to the nearest repair facility and redelivering it to you.
Emergency Transport and Hotel Expenses
If you have this motor insurance add-on cover and your vehicle breaks down and cannot be repaired on-site, assistance will be provided in the form of accommodations. To claim this benefit, you must submit documentary proof of expenditure.
Repair of Glass Rubber Plastic Parts
This motor insurance add-on cover allows you to opt for repairs rather than a replacement for your Glass / Plastic / Rubber / Fiber part at our authorized workshop, your No Claim Bonus eligibility will not be affected at the time of renewal.
Hydrostatic Lock Cover
A hydrostatic lock is a phenomenon that occurs when your vehicle’s engine comes in contact with water, preventing the engine from starting. This usually happens when a parked car is stranded in a flooded area or if the vehicle drives through a pool of water or a waterlogged area.
Standard motor insurance policies do not cover consequential losses like a hydrostatic lock. However, if you opt for this motor insurance add-on cover, then consequential losses will be covered.
Electrical Accessories
This motor insurance add-on covers the extra electrical fittings that were not part of the original make, such as fog lights and music systems. This motor insurance add-on cover can add 2-4% of the value of accessories to the premium.
Non-Electrical Accessories
This motor insurance add-on covers extra non-electrical fittings that are not part of the original make, such as seat covers, non-electrical spoilers, and y-wheels.
External Bi-Fuel Kit
Company-fitted CNG / LPG kit is covered in the car’s IDV. However, if the CNG / LPG kit has been installed separately, it is not covered in the car’s IDV. You can pay a 2-4% extra premium on the value of the kit to get it insured. This motor insurance add-on cover is mandatory for all cars with External Bi-Fuel Kit.
Voluntary Deductible
If you opt for a voluntary deductible, you will receive a discount on your premium in exchange for the reduction in the receivable claim settlement amount at the claim. This reduction is in addition to the mandatory deductible to be paid with every claim.
However, it is advised not to opt for this motor insurance add-on cover.
Limited Third Party Property Damage
If you want to restrict the TPPD cover to the statutory limit of ₹6,000, please select this motor insurance add-on cover.
Resources:
https://www.gicouncil.in/insurance-education/types-of-insurance/motor/
Frequently Asked Questions:
What is Car Insurance?
Car Insurance or Motor Insurance is a contractual agreement between an insured and an insurer. Its purpose is to safeguard against unexpected incidents while driving. The policy offers coverage to the policyholder for potential third-party liabilities and damages to the policyholder’s vehicle resulting from accidents or collisions on the road.
What are the two basic categories of Car Insurance Policies available in India?
You can choose from two fundamental types of Car Insurance Policies in India. These include Third-party Car Insurance Policies and Comprehensive Car Insurance Policies.
What is a Third Party Policy?
A Third Party Policy is an obligatory insurance policy that provides coverage to vehicle owners under Section 146 of the Motor Vehicles Act 1988. Third Party Policy is designed to compensate for damages caused to the property of third parties and also covers the death due to bodily injuries to the third parties. However, it’s important to note that a Third Party Policy doesn’t cover damages to your own vehicle.
What is a Comprehensive Motor Insurance Policy?
A Comprehensive Motor Insurance Policy offers extensive protection for your vehicle, encompassing damages caused by collisions, fires, theft, earthquakes, and more. Additionally, it provides coverage for any liability towards third parties, including death, bodily injury, and property damage caused by your vehicle.
Which Car Insurance Policy should I choose: Comprehensive or Third Party?
According to the law, having a third-party liability-only policy is mandatory to drive your vehicle on the road. However, this policy does not cover damages to your own vehicle caused by incidents like fire, theft, earthquake, terrorism, etc., which can lead to significant financial losses.
Therefore, it is advisable to opt for a comprehensive cover that not only provides financial protection for your vehicle but also safeguards you against third-party liability.
What are the Different Long-Term Car Insurance Policies Available?
Following the Supreme Court’s directive with effect from September 1st, 2018, all brand-new car owners are required to purchase a long-term policy. You have the option to select from the following long-term policies for your valuable vehicle:
Three-year Liability-Only Policy
Three-year Package Policy
Bundled Policy which combines a three-year liability cover with a one-year cover for own damage
What is IDV? What Factors Determine the IDV?
The Insured Declared Value (IDV) of the vehicle is considered as the ‘SUM INSURED,’ and it is determined at the commencement of each policy period for every insured vehicle.
The IDV of the vehicle is established based on the manufacturer’s listed selling price of the specific brand and model of the vehicle proposed for insurance at the inception of the insurance or renewal process. It is then adjusted for depreciation according to the specified schedule. Similarly, the IDV of any side car(s) and/or accessories installed on the vehicle, which is not included in the manufacturer’s listed selling price, is also determined in the same manner.
What is Zero Depreciation Cover or Bumper-to-Bumper Coverage?
Zero Depreciation coverage, or Bumper-to-Bumper coverage, is an optional motor insurance add-on cover that can be purchased by paying an extra premium. It provides comprehensive coverage for your vehicle without considering depreciation. In the event of significant damage to your vehicle, you are not required to bear any depreciation charges. Instead, you become eligible for the total claim amount, subject to the terms and conditions outlined in the policy.
What are the Advantages of Purchasing Car Insurance Online?
When you buy car insurance online, you can enjoy the following benefits:
Paperless Process: The online purchase eliminates the need for paperwork and physical documentation, streamlining the entire process.
Instant Policy: Upon completion of the online purchase, you will receive your policy instantly, saving you time and allowing you to obtain coverage promptly.
Is car insurance mandatory in India?
As per the Motor Vehicles Act 1988, every owner-driver is legally obliged to possess a car insurance policy while driving on Indian roads. While carrying a valid third-party car insurance policy is mandatory for owner-drivers, own damage insurance is optional and not mandatory.
What is the meaning of ‘Premium’ in car insurance plans?
The term ‘Premium’ in car insurance refers to the amount you pay to the insurance company to purchase a car insurance policy. It is the annual cost that the policyholder is obligated to pay the insurer in exchange for coverage against unforeseen accidents on the road, allowing them to drive legally.
The premium is impacted by factors like Policy Term, Type of Policy, the Insured Declared Value (IDV) of the vehicle, number of motor insurance add-on covers opted, Registration Year, and Regional Transport Office (RTO) details.
Is car insurance required for an Electric/CNG/LPG car?
Yes, owners of Electric cars or cars fitted with CNG/LPG must also have a valid car insurance policy. However, the premium charged can be a little higher.
Does an old car also require car insurance?
Yes, as per the Motor Vehicles Act 1988, car insurance is obligatory for all cars, regardless of their age. However, older cars typically have a lower premium since their market value diminishes over time.
Can I pay my car insurance premium in installments?
No, car insurance premiums cannot be paid in installments. Section 64VB of the Insurance Act 1938 prohibits insurance companies from assuming the risk of providing coverage to policyholders until the full premium payment is received from the policyholder before the start date.
What factors influence car insurance premiums?
Several factors contribute to the cost of car insurance premiums. The following are some of the key factors that affect car insurance:
Location of Car Registration: Vehicles registered in tier 1 cities generally attract higher premiums than those registered in tier 2 or 3 cities.
Car Manufacturer & Model: Different car variants incur varying premium amounts based on their market value and the coverage they require.
Safety and Anti-Theft Device: Cars equipped with sufficient safety and anti-theft systems lower the theft risk, resulting in lower premiums.
Type of Policy: Comprehensive car insurance is slightly more expensive than third-party car insurance, as it offers extended coverage benefits for damages to your vehicle. On the other hand, third-party car insurance comes with relatively cheaper premiums since it provides only basic third-party coverage.
Add-On Covers: The choice of additional motor insurance add on covers with comprehensive car insurance directly affects the premium amount to be paid.
How long is the validity of a motor insurance policy?
A motor insurance policy remains valid for a period of 12 months starting from the commencement date (or as indicated on your policy schedule).
What happens if someone else is driving my vehicle at the time of an accident?
The insurance coverage for your vehicle is valid even if it is being driven by someone else with your permission.
What is a ‘No Claim Bonus’ in a car insurance policy?
A ‘No Claim Bonus’ or NCB is a benefit your insurance company provides as a reward for not filing any claims during the policy period. NCB is a discount applied to the premium amount when renewing your car insurance. It typically starts at 20% and increases up to 50% for every consecutive claim-free year, rewarding your responsible driving behavior.
However, if you make a single claim within a policy period, the NCB will reset to 0%.
Can I avail the No Claim Bonus (NCB) when renewing my expired policy?
The No Claim Bonus remains valid for up to 90 days from the previous policy’s expiry date. However, if the policy is not renewed within this 90-day period, the No Claim Bonus will reset to 0%, and no benefits will be carried over to the renewed policy.
Can I transfer my insurance policy to the new owner when selling my car?
Yes, if you sell your car, transferring the car insurance policy to the new owner is possible. The buyer (transferee) needs to apply for the transfer of insurance with the insurance company within 14 days from the date of the transfer of the car and pay the endorsement premium for the remaining policy duration.
An endorsement needs to be processed to transfer the existing insurance policy to the buyer. Supporting documents such as the sale deed, Form 29/30, NOC (No Objection Certificate) from the seller, NCB (No Claim Bonus) recovery details, and copies of the old and transferred RC (Registration Certificate) will be required to facilitate the endorsement under the existing policy.
What if I replace my car or two-wheeler during the policy term?
If you change your vehicle within the policy term, you can substitute it with another vehicle of the same class for the remaining policy term. However, any adjustment of premium will be made on a pro-rata basis from the date of the substitution. It is important to inform your insurance company about the vehicle change and inquire about the impact on your premiums. You can contact your insurance company to update your policy in accordance with the underwriting guidelines.
How can I register a claim for my car insurance policy?
You can register a claim for your car insurance policy either through the company’s website or by contacting their call center.
Conclusion:
In this article, we aimed to provide you with an understanding of all the different motor insurance add-on covers available in the market and their benefits. The number of add-ons varies from company to company, and sometimes the features and benefits of the same add-on offered by two different companies can vary. So, next time you’re shopping for car insurance, check out all available options and make an informed choice.
If you have any questions, please feel free to Contact Us.
Disclaimer:
This article provides general information only and does not constitute financial advice. Financial regulations, product terms, and industry guidelines are revised from time to time. While we have made efforts to ensure the accuracy of the information presented, we do not guarantee its completeness or accuracy. We disclaim any liability for loss or damage arising from actions taken based on the information provided in this article. To make informed financial decisions, please do your own research and consult with a qualified financial professional.
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