How To Choose The Right Add-Ons For Your Car Insurance?

by SMCIB on Tuesday, 13 June 2023

How To Choose The Right Add-Ons For Your Car Insurance?

Did you know you can design and customize your own Nike shoes? You can make custom-designed sneakers that perfectly fit your foot and style by using Nike's 3D sneaker customization platform. You can personalize your shoes by selecting a colour, adding a design, entering custom text, and so on.

Similar to this, Car Insurance, too, comes with many customization options that you can choose based on your specific needs. You can add additional riders or add-ons to your policy to enhance the scope of your policy coverage. Almost all insurance companies provide you with these options. But do you need all the add-ons provided by the insurers? How can you decide what add-ons to choose?

First things first, do not blindly choose all riders that your car dealer, advisor, or any platform may recommend to you. You must ensure you understand the basic terms and conditions of these riders, and their relevance to your requirements, and only then go ahead. In this article, we discuss how you can choose the right add-on covers with your Car Insurance Plan.

So, let’s begin!

Zero Depreciation Cover: If You Don’t Like Claim Deductions

Vehicles lose their value over time as they become old. This decline in value is referred to as depreciation. When you file a claim under your insurance policy, the insurance company will subtract the vehicle's depreciation value before paying the claim amount.

As a result, depreciation can significantly increase your out-of-pocket expenses every time you file a claim. Adding a Zero-Depreciation Add-on Cover to your policy will ensure that the value of your car is not depreciated at the time of claim.

For instance, Aman has taken the Zero Depreciation Add-on Cover along with his Car Insurance Plan. One day, while he is on his way to the office, his car collides with a gate and is severely damaged. The collision damages the exhaust and the replacement cost for the exhaust is estimated at Rs. 30,000. The depreciated percentage for exhaust (made of plastic) is 50%. So -

Depreciated amount = 50% of 30,000 = Rs 15,000.

Without the Zero Depreciation Cover, Ravi would have had to pay Rs 15,000 from his pocket. However, since he has Zero Depreciation Cover, the insurer will cover the entire repair cost without considering the exhaust's depreciated value.

  1. Who Should Buy This Add-on Cover?

    The Zero Depreciation Cover is usually available for cars under the age of 5 to 7 years.

    Depreciation in the first year will be around 5%. The deduction in the claim will also be to the same extent, which is probably something you may be able to bear. However, as the car ages, and depreciation accumulates, you may have larger deductions. Hence, the need for Zero Depreciation Cover is found more relevant from the second/third year to the sixth/seventh year and even higher if available.

    So, if you dislike deductions in insurance claims and want complete coverage, this add-on cover may be handy.

    What you give: You will have to pay 25-45% additional premium.

    What you get: You will not have deductions for depreciation. These can be sizable in Years 3-7.

  2. Who Should You Skip This Add-on Cover?

    If you are a safe driver or only drive for short distances (like just going to the market on weekends), you may not have had any claims for many years. As a result, you may decide to not pay the Zero Depreciation Cover premium and instead opt for a regular plan. You want to take a basic cover, save the premium now, because you don’t foresee a large claim on your car.

Engine Protect Cover: If You Drive In Flood Prone Areas

The engine is the most expensive component of a vehicle and any repair or replacement will cost you a fortune. A Comprehensive Car Insurance Plan will not cover any damages caused to the engine.

However, if you add an Engine Protector Cover to your policy, it will cover any damage to the vehicle's engine caused by issues such as water logging, oil spills, electrical or mechanical breakdowns, and so on.

For instance, Maya’s car breaks down a few months after she buys it. She goes to the garage and discovers that the car's engine has been damaged due to oil leakage. Maya has opted for the Engine Protector Cover along with her Car Insurance Plan. So, the engine’s repair costs will be covered by the insurance company.

  1. Who Should Buy This Add-on Cover?

    You should consider buying the Engine Protector Add-on Cover, if -

    • You live, work, or travel through flood-prone areas during the monsoon season.

    • You own an expensive high-end vehicle.

  2. Who Should Skip This Add-on Cover?

    You can skip this add-on cover if -

    • You reside in an area where there are no floods.

    • You are an experienced driver who knows when to stop or control vehicles during floods.

No Claim Bonus Protector Cover: If you have a history of making claims on a regular basis

For every claim-free year under your policy, the insurance company offers you a No Claim Bonus (NCB) discount on your premium. You can earn a discount from 20% to 50% if you don’t make any claims for 5 consecutive policy years. However, if you do make a claim, the No Claim Bonus will reset to zero.

A No Claim Bonus Protector Add-on will help keep your NCB intact even if a claim is made under your policy. However, some insurers may set a cap on the number of claims that you can make under a No Claim Bonus Protector Cover. Once you cross the limit and a claim arises, then you will lose your NCB. So, ensure you check for such limitations/restrictions before opting for this add-on cover.

For instance, Shahid buys a Car Insurance Policy in 2020 and an NCB Protector Add-on along with it. He doesn’t make any claim under the policy for 5 continuous years. Hence, he gets a specific NCB discount on his policy premiums each year. He gets a discount of 20% in the first year, 25% in the second year, 35% in the third year, and so on. Let’s say in 2025, he makes a claim under the policy. In this case, he will not lose the NCB discounts despite making a claim because of the NCB Protector Add-on.

  1. Who Should Buy This Add-on Cover?

    You should consider buying the NCB Protector Add-on Cover, if -

    • You live in an accident-prone area or city.

    • You take your car to the dealership for every dent and scratch, and you like to keep your car spick and span.

    • You have a history of making claims in your policy.

  2. Who Should Skip This Add-on Cover?

    If you are a careful driver or drive very less, and haven’t claimed much in the past, in that case, it is not necessary to include this in your coverage as it will merely increase the cost of your policy.

Roadside Assistance Cover - If You Are A Long Distance Driver Or A Noob

A Roadside Assistance Cover will help you get roadside assistance in case your vehicle breaks down in the middle of the road.

For instance, Anish has a Comprehensive Car Insurance Plan with Roadside Assistance Cover. is on a solo road trip when suddenly, his car runs out of fuel in the middle of the road and he is not able to find any petrol station in an unfamiliar location. In this case, he can use the Roadside Assistance Cover by notifying and asking the insurer to assist him with the fuel supply.

Services available under roadside assistance include -

  • Changing a flat tyre
  • Car towing
  • Fuel delivery
  • Minor on-site repair
  • Arrangement of replacement of car keys
  • Battery jump-start
  1. Who Should Buy This Add-on Cover?

    This add-on can be a lifesaver in case your vehicle breaks down in the middle of the road. You should consider buying it if -

    • You drive long-distance

    • You need someone to assist you with repairs in case of a breakdown. For instance, you don’t know how to change a tyre in case your car has a flat tyre.

  2. Who Should Skip This Add-on Cover?

    You can skip buying this cover if -

    • If you only drive your car in the city during working hours, where help is usually available, there are fewer chances of you getting stranded. Hence, you may not require this cover.

    • Some manufacturers provide roadside assistance when you purchase your vehicle from them. In such cases, you don’t need to purchase the Roadside Assistance Cover from them.

Return To Invoice Cover - For New Cars

The value of a vehicle depreciates as soon as it is sold and leaves the showroom, and it depreciates by a specific percentage each year. The insurance company covers your vehicle based on its current market value, which is known as the IDV. In case your vehicle undergoes total damage or is stolen, you will receive the depreciated value of your vehicle rather than the invoice value.

If you opt for the Return To Invoice (RTI) Cover, the insurer will pay you the invoice amount of the car, i.e., its original amount in case of total damage or theft - without factoring in the depreciation. Insurers only provide Return To Invoice Cover for the first two years of your vehicle's life.

For instance, Karan buys a new car for Rs. 10 Lakhs. Along with the car, he buys an insurance policy with an IDV of Rs. 10 Lakhs. The value of his car will begin to depreciate the moment he takes it out of the showroom. A few months after he bought the car, it was stolen. Let’s assume it depreciated by 10% within the first year.

Depreciation = 10% of 10 Lakhs = Rs. 1 Lakh

Compensation insurer will provide = 10 Lakhs - Depreciation

= 10 Lakhs - 1 Lakh

= 9 Lakhs

So, the insurer will pay Rs. 9 Lakhs to Kiran.

If Karan had purchased the RTI Cover with his insurance policy, the insurer would have paid him the invoice value of the car. This means that he would have received Rs. 10 Lakhs from the insurance company.

  1. Who Should Buy This Add-on Cover?

    You should consider buying a Return To Invoice Cover if -

    • You live in an area that is prone to theft.

    • You cannot bear the deduction with respect to depreciation in the first two years of your policy.

Personal Accident Cover - For Everyone

A Personal Accident Cover will provide financial protection in case of death or permanent disability of the owner-driver as a result of an accident.

For instance, Tara has a Comprehensive Car Insurance Policy with an IDV of Rs. 5 Lakhs along with a Personal Accident Cover of Rs 10 Lakhs. She meets with a major accident while he is on his way to work and dies on the spot. In this case, the insurance company will pay a fixed sum of money as per the policy’s T&Cs to Tara’s family.

  1. Who Should Buy This Add-on Cover?

    If you don’t have a separate Personal Accident Insurance Policy for yourself, you must consider buying an owner-driver add-on cover along with your vehicle’s Car Insurance Policy.

  2. Who Should Skip This Add-on Cover?

    You can skip this add-on if you have a separate Personal Accident Insurance Policy of 15 Lakhs.

Personal Accident Cover For Passengers - If you usually travel with other folks/colleagues etc.

This add-on will offer coverage for passengers riding in the vehicle with you in case of death or permanent disability as a result of an accident.

For instance, if you look at the Cyrus Mistry case, both him and a friend died because of a terrible car accident. In such situations, only the policy owner or third party will be eligible to recieve the claim amount, depending on the type of policy. Any passenger will not be covered. However, if a Personal Accident Cover for passengers is added to the insurance policy, the insurer will provide compensation as per the policy’s T&Cs.

  1. Who Should Buy This Add-on Cover?

    The life of your co-passengers is as valuable as your own. If you are a frequent traveller who travels with family or friends, it is best to get a Passenger Cover Add-on along with your Car Insurance Policy.

  2. Who Should Skip This Add-on Cover?

    If you do not use your vehicle frequently or always travel alone, then, buying this add-on cover is not necessary.

Wrapping Up!

You buy a vehicle after saving for months and years to make your dream of owning a vehicle a reality. And once you buy it, you will always want it to be in better condition and well-maintained. So, you try to buy an insurance policy that provides better coverage for your vehicle and has a hassle-free claims experience. The add-ons can be of great help when it comes to providing extra protection to your vehicle.

Add-ons such as Zero Depreciation Cover, Personal Accident Cover for Owner-Driver, and Consumables Cover are must-have add-on covers for your vehicle. Apart from these, the other add-on covers are subjective because they depend entirely on the usage of your vehicle, where it is being driven or parked, how frequently you travel, and so on.

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