Is it worthwhile to purchase add-on covers in car insurance?

Protecting a car with insurance coverage is mandated by the Motor Vehicles Act, 1988. The law states that all vehicles on Indian roads should be shielded with a minimum level of insurance protection, also referred to as third-party liability insurance. With a plethora of car finance options available in the market today, almost every urban household in India has a car. Car insurance companies also offer a wide range of coverage options to the prospective customer. So, you do not need to settle for a minimal level of insurance for your prized possession; you can go all out and equip your vehicle with an assortment of ancillary cover based on your requirements.

Add-on covers in motor insurance

Much like the riders under life and medical insurance policies, a car insurance add-on cover offers extra protection to the insured vehicle. The add-on car insurance covers come at an extra cost; some even cost up to 20% of the base policy. Here is an overview of some of the add-on covers in car insurance that are worth purchasing:

• Zero depreciation cover - This add-on is highly recommended for new cars, as it entitles you to the complete cost of repair of car parts at the time of a claim. Consider a scenario wherein your vehicle is protected with a comprehensive motor insurance policy. The term "comprehensive" is actually a misnomer here, because there are certain costs/events that are not included under the coverage of the plan. So, if your vehicle meets with an accident, at the time of repair, you will have to bear a portion of the claim amount that corresponds to deductibles and depreciation of car parts. However, if your vehicle insurance was enhanced with a zero depreciation add-on cover, the insurer will bear the expenses pertaining to depreciation.

Listed below are some points to note with respect to this add-on cover:

• Most insurance companies offer this rider to new cars that are less than 5 years old.

• This insurance cover is valid only in the event of a partial-loss claim.

• Only two claims are permissible under a zero depreciation cover during the policy term.

• This is one of the most expensive add-on covers available for your car; but the coverage it offers is very useful to a car owner.

• Engine protect cover - This add-on cover protects the heart of your vehicle, its engine. The ordinary comprehensive car insurance policy does not offer coverage for the damages to the engine. Hence, amplifying your motor insurance coverage through the purchase of an engine protect cover is very useful for people who reside in areas prone to waterlogging. Some points to note about this add-on insurance are:

• The engine protect add-on does not cover engine damages caused by accidents.

• This insurance cover is particularly useful for high-end cars for which the cost of engine repairs would amount to a significant value.

• This add-on cover is offered at a very affordable rate by insurance companies.

• Roadside assistance cover - Under this add-on cover, the insurance company offers round-the-clock emergency services like towing, refuelling, tyre change, arranging for a mechanic, etc. Whatever the case may be, it is highly recommended to be in possession of this insurance cover, as it provides the much-needed assistance in an emergency.

• Consumables cover - The repair of a car takes up a lot of consumables, such as brake fluid, nuts and bolts, engine oil, and coolants. The cost of consumables can push the motor vehicle repair bill amount to a significantly higher value. However, if you are in possession of this add-on cover, the cost of consumables will be reimbursed by the insurance company.

• No Claim Bonus (NCB) protect cover - A car insurance plan will accrue a No Claim Bonus (NCB) when a policyholder does not make any claim in a year. This bonus can be used to avail a discount in the renewal premium for the subsequent year. Since the NCB is a very attractive benefit, it should be protected by refraining from raising claims for small damages.

The NCB protect cover helps in safeguarding your hard-earned NCB. If you are in possession of this add-on cover, the NCB will be retained even after you raise a claim. However, this add-on is also not offered to vehicles that are older than 3 years.

Having an add-on cover with your car insurance policy is like an additional safety net to protect you from unpleasant eventualities. If a friend has purchased a popular add-on insurance cover, you do not need to join the bandwagon. You should assess your insurance needs carefully and choose add-on covers based on your unique requirements.