An engine add-on motor insurance covers damage from water

Published in Mint on 21st August, 2017. Written by Abhishek Bondia

I am being inundated with messages and advertisements to get my car monsoon-ready with a motor insurance policy. Do insurers offer any special insurance specifically for the rains, or any special period of the year? Also, is it possible to buy a rider or add-on cover for a limited part of the year, or a few months, instead of the whole year?

—Mandeep Hazarika

There is no specialized motor insurance plan for monsoon. However, claims do rise substantially during this period. One of the frequent claims in monsoon is that of engine seizure. If a car is restarted amidst water logging, often it leads to engine damage. To cover this, you should buy a specific add-on for engine cover. This add-on will cover repair or replacement of engine parts due to ingress of water in the engine.

You can buy a motor policy for less than 12 months. However, it is generally not economical to buy a motor cover for shorter durations. Anyway, third-party liability insurance for a motor car has to be purchased for the entire year.

Does any motor insurer offer an add-on cover in which the cost of hiring an alternate car will be covered during the period when my car is being repaired in a garage? What is the typical cost of such covers and what are some of their features? Is there any policy or add-on in India that offers a back-up car in case of an accident—so that the insurer arranges the car instead of reimbursing me the cost of hiring one?

—Anshul Gupta

Yes, insurers offer add-on covers to reimburse cost of hiring an alternate vehicle, while the insured car goes through repair. A separate add-on can even provide a temporary replacement car itself rather than just expense reimbursement of hiring an alternate vehicle.

The add-on would typically pay for hiring an alternate vehicle for about 10 days, if the car is repaired. In case of a total loss such as theft, the add-on may reimburse alternate car expenditure for 15 days. Reimbursement starts from the day of car reporting to garage and ends on the day garage reports that the repair is completed. It would also have a minimum threshold, for example, the repair should require at least 3 days. Generally, the payout for this add-on is fixed. Actual expenditure incurred by the insured is not considered. Payout typically varies between Rs600 and Rs2,000 per day, depending on the type of the vehicle. If the insurer is supposed to arrange for a replacement car, it would arrange the temporary car for 8 hours or 80km, whichever is less. If the insurer fails to do so, it may pay similar amounts as above for compensation. This add-on excludes specific situations. For example, add-on would not trigger in case of windscreen damage. Such add-ons cost between 0.3% to 0.9% of the vehicle’s Insured Declared Value, depending on the type of vehicle.

I am planning to buy a car to use as a taxi. What are the differences between buying insurance for a commercial vehicle and for a private car? I am planning to buy base version Maruti Suzuki Dezire for the taxi. Can you please compare its insurance cost as a private car and a taxi?

—Fiza Saran

Commercial vehicles are considered to be higher risk as compared to private vehicles. Insurers charge relatively higher premium for commercial vehicles for both ‘own damage’ as well as ‘third-party liability’. For instance, the ‘own damage’ base cost for an entry sedan would be around Rs18,500 for a private vehicle and Rs19,500 for a commercial vehicle. This will get reduced by the discount negotiated with the insurer and accrued no-claim bonus. ‘third-party premium’ for the same car will be around Rs2,800 for a private vehicle and Rs8,400 for a commercial vehicle. If a car is to be used as a taxi, I recommend to declare the same to the insurer. Non-disclosure could lead to claim repudiation.

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