First-time car owner Dheeraj Gupta bought an insurance policy, which has the least premium payout.
Just a year later, he met with an accident and claimed 100 per cent cash from the insurer. But the insurer informed him that only 70 per cent of the insured amount would be paid as there was depreciation due to the age of the vehicle. Hence the sum insured would reduce as the age of the vehicle increases and would get only 70 per cent of the claim. This is the case of many such ignorant customers who do not read the policies completely nor are aware of what is available in the market.
Insurance regulator IRDA has a standard and approved set of motor insurance policies which are commonly used by all the insurers in India. However, the regulator has permitted to add certain covers — add-ons — over and above basic motor insurance product.
Add-on covers play a pivotal role in differentiating the insurance companies and products offered by them. They are not available as individual products. Here are some of add-on covers, which are commonly available with most insurance companies. Depreciation cover: The basic motor policy has a ‘depreciation’ clause, which means customers have to bear a certain portion on the cost of spare parts replaced in each claim. Depreciation varies depending on the age of the vehicle for metallic parts, whereas it will be 50 per cent for plastic parts, 30 per cent rubber items and fibre glass components.
Invoice price cover: It provides protection of gap between the insured value and purchase price. When a customer owns a car, after two years there is always a difference between insured value and invoice value as the insured value keeps decreasing every year.
Roadside assistance: This cover provides assistance at the time of breakdown, towing the vehicle to nearest garage, fixing the flat tyre, arranging alternative transport to nearest town.
Hospital cash cover: This will provide a fixed amount to the insured each day as hospitalisation charges.
Ambulance charges: It reimburses transportation of the insured in ambulance to the hospital.
Medical expenses cover: The cover is intended to reimburse medical expenses to insured or his family members following treatment of injury.
(The writer is head of the motor vertical at Bharti AXA General Insurance)