New Year Car Insurance: Important Add-ons for Financial Year

Posted on: Oct 26, 2021 | 3 mins | Written by: HDFC ERGO Team

New Year Car Insurance: Important Add-ons for Financial Year

Car insurance is a financial safety net designed to come to your aid in case of an unfortunate event related to your vehicle. Whether your car gets damaged in an accident or a natural or manmade disaster, the insurance policy will have you covered. Even theft is covered under the comprehensive insurance policy, giving you peace of mind.

However, not every insurance policy gives you extensive coverage. Third-party liability insurance only provides financial protection against any injury to a third-party person or their property. For better coverage, you need a comprehensive car insurance policy. Still, this insurance is not all-encompassing because of the innumerable variables involved, such as different car manufacturers, different technologies, different driving styles of millions of people, etc. So, if you take a comprehensive policy, check car insurance online to understand the inclusions and exclusions carefully with just a few clicks.

And for more robust coverage or if you need to meet specific needs, choose add-ons. These are extra coverage ‘packs' that you can avail of in addition to your base comprehensive policy. Let's take a look at some of the most commonly availed add-ons that can help you usher in the New Year brightly and positively.

1. Zero depreciation

Cars, like most assets, undergo depreciation. Every year, the value of your car decreases as a function of time. Therefore, in case of any repair work that is carried out, you must pay the cost of depreciation while the insurer covers the cost of the new part. This means that even if you're adequately covered, there will be some amount of out-of-pocket expenses due to depreciation. With a zero-depreciation cover, though, the entire cost of the replacement part will be borne by the insurer.

2. Return to Invoice

This is another common add-on that is hugely beneficial if you have a high-value car. Your comprehensive car insurance is renewed annually, with the insurer setting an Insured Declared Value (IDV), which is the highest value of your vehicle now. This IDV is also the highest amount that the insurer is willing to pay in case of total loss of your vehicle, or case of theft. The IDV accounts for the depreciation of the vehicle, age, wear and tear, etc., and is always going to be lower than the original cost of the vehicle. This is where the return to invoice cover helps since if your car is damaged beyond repair or gets stolen, you get the entire money (on-road price) that you had paid for the car.

3. Engine protection

This is a crucial add-on that can help significantly if you live in conditions that pose a threat to your engine. Besides being the heart of the vehicle, the engine is also its most complex and vulnerable part. Damage to the engine is both expensive to repair and practically immobilises the vehicle, rendering its fundamental purpose redundant. And engines are not covered under the standard comprehensive policy. Therefore, you can avail of an engine protection cover to ensure minimal out-of-pocket expenses in case of any damage to your engine.

4. Consumable cover

Consumables are essential commodities that, once used, cannot be reused and need to be replaced. These include engine oil, lubricant, break oil, gearbox oil, grease, bearings, nuts, bolts, air conditioner gas, and other such items. The consumable cover add-on ensures that these commodities are replaced without you having to incur any expenses.

5. NCB Protect

No Claims Bonus is a discount that insurers offer on the subsequent damage premium component of your comprehensive insurance policy. This discount rewards people who do not file claims. It can be 20% after the first claim-free year and can go up to 50% after five consecutive claim-free years. Because the discount accumulates and increases every claim-free year, it incentivises fewer claims and, therefore, more careful and safe driving. However, accidents happen without warning and sometimes through no fault of your own, requiring the filing of a claim. This resets the NCB discount. But with an NCB protection add-on, you can raise a claim without resetting the NCB discount.

6. Passenger cover

The benefits of a comprehensive insurance policy are usually restricted to the policyholder or owner/driver of the vehicle. However, there can also be passengers in the car during an accident. While the driver gets the benefit of personal accident cover in the policy, the passengers need to fend for themselves. However, this cover takes care of the medical expenses of the passenger(s), provides disability cover, and offers financial assistance in case of death due to a car accident.

How to Find the Right Car Insurance Policy?

Finding the right car insurance policy is one of the prerequisites for safeguarding your vehicle and finances. Here is what to follow for effective navigation of this process:

1. Analyse Your Requirements

First and foremost, always look into your own specific needs. Consider parameters such as the value of your vehicle, driving habits, and whether coverage for comprehensive car insurance is needed to cover damages arising from natural calamities.

2. Look for Options

Search for the various car insurance providers and compare their offers. The focus has to be on policies that cover comprehensive car insurance because this coverage usually covers many risks, including theft, accidents, and natural disasters.

3. Natural Calamity Coverage Must Be Checked

When looking for car insurance for natural calamity, make sure to ask specifically for any natural calamity coverage. Make sure to check that the policy protects against floods, earthquakes, storms, and other natural calamities that can cause serious damage to your vehicle in the event of such circumstances.

4. Check the Reviews and Ratings

Investigate the customer reviews and ratings for different car insurance companies. This will give you an idea of the reliability and customer service itself, which are the most important factors whenever there is a need to file a claim.

5. Talk to Agents

You shouldn't feel shy at all when asking an agent for their viewpoint; consultation in this case is needed. They can help you with various components of comprehensive car insurance and natural calamity coverage.

After following these steps, the above-mentioned great possibilities for car insurance can be found, meeting your request and providing peace of mind.

FAQs

1. What is new car replacement coverage?

New car replacement coverage provides financial assistance in acquiring a brand-new vehicle of the same make and model within a certain period or mileage if your new vehicle suffers a total loss.

2. What add-ons are usually included to enhance auto insurance?

Common add-ons are roadside assistance, rental reimbursement, and gap coverage and they provide coverage in certain situations.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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