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Procedure to choose the right motor insurance policy and add-ons for a vehicle

Legal correspondent: Soumya Kanti Mandal

10th December, 2021: After a huge pandemic situation of Covid-19 the market of vehicle is on its flow once again. With the slow down on the restrictions upon the rules and regulations on Covid-19, The people are tending to gear up the automobile industry. The best way to utilize the funds on insurance policy needs a certain time of planning.

Anyone who have the explorer of driving on Indian roadside cannot deny on the cases of accident. In our life cycle, we often see us as a witness of road accidents. The on record data on road accidents resonate this fact. As per the recent report of World bank, India perceive an enormous number of accidents of 4.5 lakh crashes each year. The report of World Bank also displays that India heads the rank of road accident deaths, where we contributes only 1% of production of vehicles in the world. Those numbers are not only reflecting the gloomy scenario on our road consciousness but also bracing our mind on the topic of insurance policy and proper add-ons in terms of protection of life.

The government had mandated on the subject of insurance on motor vehicles earlier from 2019. It is a always a matter of distressing for someone who experienced or involved in the certain aspects. Third party insurance policy and comprehensive insurance policy are two different types of insurance coverage in terms of actual applicability of insurance. Where third party insurance policy deals with the damages caused by the vehicle to any third party and comprehensive insurance policy deals with the risk cover for the vehicle from any unprecedented financial loss arising due to accidents. A comprehensive policy coverage always play a comprehensive role while its come with the matter of theft or natural calamities.

Here are few safeguards to protect the vehicle with right insurance policy and add-ons:

1. Third party cover and own damage cover: Third party insurance is mandatory by the Government of India. One can option out between Third party insurance policy and Comprehensive insurance policy that protects damage to the vehicle as per the policy terms. If a owner have an older vehicle or while someone is unable to take the road quite often, a third party cover may be a good enough option for the owner. This is because it is easy for the owner for paying up more premium in an extensive policy while the owner might not need it. The Third-party insurance is always preferable for small damages, paying out of your own pocket could be a cheaper option than an extensive policy.

On another aspect of own damage cover policy for those vehicle owners whose vehicles are new or being regularly driven, one should definitely opt for comprehensive coverage. This will not only cover from accidental damages but also risks like flood, fire, theft etc.

Important Add-ons for your motor insurance

1. Zero Depreciation Cover : The value of vehicle go through with the depreciation of amount as the vehicle gets older. The insurance policy customarily does not cover the devaluation cost of the vehicle. So, at the time of settlement, the claim amount is calculated after deducting the depreciation cost. But, adding a Zero Depreciation cover to your policy helps take into account the markdown costs as well and get you a higher refund at the time of settlement. This add-on usually covers the cars which are 5 years old or bikes which are 2 years old. Some insurers recently offer Zero Depreciation up to 7 years as well which might be a great opportunity for policy holders for this kind of settlement.

2. Return to Invoice Cover – Speaking of depreciation, a vehicle is considered depreciated as soon as it is released out of the showroom. So, in case of a total loss, the policyholder will be eligible to claim for the market value of the vehicle, which will be lower than the amount at which it was purchased. Adding this cover to your policy helps you claim the original invoice price of the vehicle in case of a total loss.

3. Roadside Assistance Cover – This cover comes in cakewalk when someone vehicle breaks down in the middle of the road and you need immediate assistance from the nearest service centre of the particular company. Adding road assistance cover to your policy makes sure that the help you need is just a call away. The insurer will arrange for a mechanic who will help you on the particular spot in case needed. It is one of the popular offer by most of the bumper-to-bumper insurers.

4. Engine Protection Cover – The engine is the heart of the vehicle and it suffers non-accidental damages while keeping your vehicle up and running. The performance of a vehicle always depends on the performance and longevity of a engine. Unfortunately, these damages are not covered by insurance some certain premium add-ons offer the engine protection coverage. This add-on helps insure your vehicle against risks like an oil spill, water ingression or mechanical breakdown, etc.

5. No Claim Bonus Cover – This cover helps keep the policyholder for no claims bonus completely. No claim bonus in the policy rewards the car owners for making no claims during the policy year. It is essentially a discount on the insurance premium on renewal if there are no claims during a policy year. However, as soon as owner make even a minor claim, The owner’s NCB lapses and you have to pay the premium in full. The NCB add-on feature protects the policyholders bonus in case of make a claim during the policy year.

Most important Claim Settlement Ratio

Before the zero in on a plan, always check out the claim settlement ratio or csr score. This ratio refers to the number of claims settled by the insurer against the total number of claims received in a year. Then, we need to find out a good CSR ration. Typically, a CSR of 90% or above is considered to be the ideal ratio. Also, you need to make sure that the process of settling the claims should be quick and hassle-free.

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