Customized Motor Insurance Policy

Industry – General Insurance

Is the policy under Customized Motor Insurance program adding any value to the customers?

Why should customers stick to such program despite the fact that premium on those policies are very expensive?

Does it really make any sense to pay that additional premium and stick to such program polices !!! is something which needs to be understood in depth.

The features, advantages and benefits of an insurance policy from each and every Insurance company is identical in nature since it is always as per their own understanding of the product and filing with the regulator, in a way it is advantages to the customers that they get to enjoy the best ones but how will they know the worst ones unless and until they do a detailed analysis on their own.

Does a customer who buys an insurance policy once in a year find time to do such analysis in depth or rather, I would say even if they have time, it needs lot of technical know how on how a motor insurance policy terms and conditions work.

That is why I would like to give a brief background of what is a motor insurance policy, its components along with the details on, what is a basic comprehensive policy and an add-on or Nil-Dep policy or top-up covers that are available in the market with various insurance companies in a nut shell and finally you will understand, why should you stick to your own program insurance policies and how they are more beneficial when compared to a normal insurance policy.

Basically, a motor insurance policy constitutes 3 parts

1.     Own Damage premium which takes care of any accidental damages to your own vehicle which is optional and it is at the discretion of the customer to avail this cover or not

2.     Third party premium which takes care of any accidental damage to a third-party life or non-life / some property where in the liability of the insurer is decided by the court of law in terms of a life damages and 7 lakhs is the max liability in terms of a non-life or any property damages. This is mandatory cover as per the law in India and any vehicle running on the road should have this policy compulsorily.

3.     GST which is applied at 18% on the total of OD premium and TP Premium which is also mandatory and unavoidable.

Having said this there is a fourth aspect which is again an optional cover which is called as add-on cover or nil-dep cover or zero-dep cover or bumper to bumper cover as they are called in the market and this is what is making a lot of difference in the cost of the premium of a policy which is directly proportional to the coverages available in the policy.

These add-ons are the products filed by the insures individually with the regulator mentioning the features, advantages and benefits of such covers along with the pricing for each filed product which is at their sole discretion.

Lets us see what are these add-ons and why are they required?

There are certain limitation on the coverages that available on a basic comprehensive policy consisting of an OD premium and TP premium only. Like for example a deprecation will be applicable and a cost is deducted on the value of the parts replaced as per the age of the vehicle at the time of the settlement of a accidental claim by the insurers, similarly there would be deduction of consumables which are your nuts, bolts and washers in such polices by all insurers by default and I can list at least 10 such more deductions which are not covered under a basic comprehensive policy and the important point to note here is that all these deductions are allowed by the regulator legally in a way to ensure the interest and sustainability of the insurers in the Indian markets.

Now coming to what is an add-on policy, it would be easier to explain that whatever is not covered under a basic comprehensive policy can be covered under a add-on policy.

By looking at the below add-on covers listed by me, you will be able to make out what is covered and not covered in the motor insurance policy you are holding for your car/bike/commercial vehicle.

1.     Zero-Dep cover which ensures no depreciation on your claim despite the age of the vehicle

2.     Consumable Cover which ensures nil deduction on nut/bolts and washers

3.     Engine cover which ensures consequential damages to the engine

4.     Tyre and Rim cover

5.     Loss of key cover

6.     Return to Invoice cover which ensures to get almost a new vehicle during total loss

7.     Additional Towing cover

8.     IMT 23 cover for rubber and plastic parts

9.     EMI cover/Loss of income cover/loss of belonging cover

10.  NCB protect/cover

So apart from availing an insurance policy it is mandatory to ensure that you have the above coverages in your insurance policy such that you tend to lose minimum during an accidental claim as many of us fail to understand that an insurance policy is to only minimize our losses and not to recover our losses.

Now tell me who will be the best person to assess what is required in your motor insurance policy. Is it the program manager who deals with such things on day to basis who will have a fair idea on the requirements of his customers or it is you who avail insurance once in a year and experience a claim once in a while?

That is why I always strongly recommend my customers to stick to their own program polices which will ensure 100% hassle free settlement at the time of need and am an expert in identifying the needs of my customers and design a program that will be beneficial to my customers on top priority. Am bit expensive but come with loads of value for the money paid... Pls let me know your views on the same.

Regards, Srini