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Published in Mint on 4th December, 2017. Written by Abhishek Bondia

I met with a road accident and there was extensive damage to the car’s engine and windshield? Can you tell me what all will be covered by the insurer? Will the policy also pay for tyres and all the motor fluids in the engine, as all that can add up to a substantial amount? Please let me know in detail what kind of damages is not covered by a comprehensive car insurance policy.

—Biswajit Swain
The standard motor insurance policy excludes a few expenses. For example, in case of plastic parts, depreciation is deducted depending on the part’s age. Consumable expenses such as engine oil and tyres are not covered. From the payable claim amount, the policy deductible is reduced as well.
In your case, the cost of the engine and the damaged parts, such as glass and body, will be covered. If your policy has an add-on for zero depreciation and consumable expenses, then the aforesaid deductions will also not apply.

I buy goods from abroad and sell domestically. I also procure goods locally, get some minor improvements done and then sell them abroad. Is there any way I can get all the damages during transit covered under an insurance policy? What is the process of buying such a plan?

—Amit Gupta
Yes. You can buy a marine insurance policy to cover damage to goods while in transit. All types of transit—including import, export, domestic purchase and sale, and movement of goods to job workers—can be covered. Within marine insurance, there is a specific type of policy called ‘sales turnover policy’. Such a policy will cover all types of transits. A blended premium is charged only on the annual sales turnover. Thereafter, all goods movements are covered. Such insurance policies ensure ease of administration.
To buy a sales turnover marine insurance policy, you should note the aggregate value of goods movements for each type of transit. You can share that with the insurer as approximate values. Based on the nature of goods and the aggregate value of all transits, the insurer would offer a blended rate. Once the policy is issued, you would need to declare the goods’ movements every month-end to the insurer. Alternatively, if you need to cover only specific types of transits, you can buy a marine open insurance policy for those specific types of transits. Separate premium would be charged for each type of transit and you would need to make separate declarations for each policy to the insurer.

Should I consider health insurance plans offered by life insurance companies? What is the difference between a hospital cash and a normal Mediclaim policy? Which is better? If I already have an employer-provided group health insurance plan, then is a hospital cash policy better?

—Name withheld on request
Health insurance plans offered by life insurers are typically fixed benefit plans. Under a fixed benefit plan, the claim amount payable is predetermined for each insured event. For example, if the insured undergoes a heart surgery, the plan may stipulate a payout of Rs2 lakh. This would be paid irrespective of the actual expenditure incurred by the insured. A fixed benefit plan would pay over and above the claim amount receivable from an indemnity plan.
A hospital cash plan is a fixed benefit plan. A typical hospital cash plan would have a fixed amount payable on each day of hospitalization or intensive care unit (ICU) stay or type of treatment undergone. In a normal medical plan, your actual medical expenses will be reimbursed subject to the policy limits.
A normal indemnity-based health insurance plan should be prioritized. A hospital cash plan should be seen as a supplementary plan. Proceeds from the hospital cash plan could be used to cover non-medical out-of-pocket expenses, and outages over plan limits of the traditional indemnity plan.
If you are already covered in a group health insurance plan, then a hospital cash policy works out better. You could claim from both the policies. However, we recommend a personal indemnity plan as well and if you wish to take a hospital cash policy you can take that as an add-on.