JOIN USIn India, third party liability is an obligatory factor of any motor insurance policy. This is because it helps safeguard the liability arising from death/disability of third party or loss / damage to a third party property.
For the loss or damage to the vehicle or the person driving the car, there is no mandatory insurance cover and hence people generally do not opt for the insurance component that covers their vehicle and self. Most of the time, vehicle owners are aware of the ‘own damage component’, yet they avoid it thinking they will bear the garage bill or the hospital bill which will be a small amount.
Financial stress
In reality, people often spend a major amount on the repair of their vehicle in absence of an own damage insurance cover or lose a major part of their savings by paying hospital bills.
Accidents are inevitable and add to financial stress in the absence of a comprehensive insurance cover. While we cannot control the amount of loss due to an accident, we can certainly make advance provisions against these circumstances by shifting to ‘comprehensive insurance cover’ from the present ‘third party liability cover’.
A comprehensive motor insurance policy covers any damage to the car arising from collision or in cases like theft, fire, weather and natural disasters, falling objects, street riots, animal damage and other perils.
A comprehensive insurance policy gives protection and peace of mind. The insured can claim for accident if he/she is guilty or for someone else’s fault too. Therefore, one doesn’t have to worry while parking the car under a tree or in a narrow street.
To make the most of motor insurance, one should add a personal accident cover for the driver which will make the comprehensive cover a wide-ranging cover. The personal accident cover will take care of all the hospital and medical expenses arising from an accident.
There are other covers that one may opt for while buying a comprehensive insurance cover. These are suggested because with these covers in place, things will be manageable in adverse circumstances.
A few of these covers come as additional features to the existing policy and for others, one may have to pay a little extra premium.
Zero depreciation: It is a top-up add-on cover on standard car insurance and does not provide 100% of the cost for repair. The cost of repair could vary from 0% to 50%. This feature helps maintain the IDV of the car which depreciates year-on-year.
Return to invoice price: This feature covers the gap between the insured value of the car and the value of the car when it was newly bought. For cases like total loss, this feature becomes very important as one can make the insurance claim against the invoice price.
Enhanced personal accident cover for paid driver and unnamed passengers: The feature covers personal accident for the hired driver and also the passengers in the car at the time of accident.
Inconvenience allowance/ daily cash allowance benefit: Daily cash allowance is paid to the insurer in case the vehicle is laid up in an authorised garage/ service station for repairs of accidental damages or stolen.
Loss of personal belongings: Few insurance companies also cover personal belongings present in the car, if stolen or damaged due to accident. The amount covered represents a small part of IDV.
Emergency transport and hotel expenses: If the car breaks down and there is no transport available for the next few hours and one has to stay in hotel, the lodging and food expenses incurred during the stay will be paid by the insurer.
Comprehensive cover is essential and slightly more expensive than the third party cover.
Therefore, while upgrading motor insurance cover, it is significant to assess the premium, match them against the features and decide astutely.
(The writer is Head of Product Development at SBI General Insurance)