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Yogi Zone

Useful articles for your finance management by our team of experts

Watch out when purchasing add on cover for vehicle

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add on cover for vehicleAdd-on cover in your automobile insurance policy is made to expand the scope of coverage in the insurance cover. However, these covers also increase your cost and so the decision to go for these extensions can only be made based on the requirement of the policy. Now-a-days. various companies are offering such covers, but it should be need based, otherwise it can work to amplify your premiums. If purchasing a car is a luxury, insuring it is a necessity in order to save from contingent risks. There are several add on covers available in the market, it is up to you to choose which cover to take. There are some decent and useful vehicle risk covers available in the market.

No Depreciation Policy:

This cover ensures that no depreciation is charged when you go for a claim of your vehicle. This is the simplest, yet most important add-on cover. Generally, depreciation is calculated on the value of the vehicle as it is considered a machine asset. Now, in case of repairs, you generally get the depreciated value as claim and therefore, the remaining amount will be deducted from your pocket. In case of no depreciation policy, you are completely relieved from sharing the losses as the insurance company would cover the full damage without any deduction.

Insurance of CNG kit:

The rise of petrol and diesel prices has resulted in many car owners switching to diesel and LPG kits in their vehicles. The risk of fire increases in such kit during the summer. These kits can be insured with the help of certain additional premium policies offered by the companies.

No claim bonus and retention:

This is a bonus that you get in case you don’t opt for any claim within a year or after inception of the policy. In other words, it is a reward for your actions. These claims start from 20 percent and can go up to 50 percent depending on no claim made or pending during the preceding year of insurance. Earlier, a small claim used to nullify the “No claim bonus” from a policy holder. But, this is not the case now as many insurance companies are giving the offers of protection of this bonus up to a certain limit and additional premium.

Co passenger’s insurance:

In case of a mishap, the life of not only the driver, but other persons sitting in the vehicle is also at stake. In such cases, one can take benefits of Co passenger’s insurance against death or disability due to an unfortunate accident.

Assistance on road:

This is another important cover that saves you from a lot of frustration and covers your vehicle in a situation of any technical break down on the road. It is possible that your vehicle gets affected in the middle of the road or your car tyre gets punctured. Such a scenario can be dealt with by taking a road assistance cover that provides safety against odds.

Premium Charges:

Premium charges of any vehicle insurance policy are dependent on the sum insured, vehicle type, age of vehicle, place of registration.  Meanwhile, Insurance Regulatory and Development Authority have set minimum value for the computation of premium. These values are based on cubic capacities.

Cubic Capacity

Minimum Value

<1000 cc

Rs 15000

>1000 cc but < 1500 cc

Rs 20000

>1500 cc

Rs 30000

Source: IRDA

Important Things to Remember

People usually stick to their first insurer year after year. It has been seen that they might be paying more than the prevailing market offers by other companies. It is always advised to check the offerings at the time your vehicle insurance policy is due. Compare and inquire from the insurers and their policies so that you get the best deal. You might be missing out some good add-ons at lower costs in the existing policies, such benefits can be utilized adequately with your proper research and awareness.

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