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Add on covers for motor policies

Monday, January 10, 2011

I have a comprehensive insurance policy for my Honda City 2010 model. After a small accident, when I registered the claim with my insurance company, the representative gave me an approval for reimbursement of only 60% of the total expenses suggested by the workshop. I am very disappointed. Is there some good car insurance policy which offers more benefits and does not keep many exclusions?
Vikram Aziz, Malad West

Many people might have experienced a similar issue. When we make a claim in our insurance policy, the insurance company comes out with a list of exclusions which reduces the settlement amount sizeably. This is very frustrating especially when you are paying high premiums and that too regularly.

Nowadays companies have come up with some good add on covers to a motor insurance policy like Depreciation Reimbursement Cover:
This add-on cover offers full claim without any deduction for depreciation on the value of parts replaced.

Return to Invoice Cover:
In case there is a total loss due to some accident, then there is always a difference between the ‘purchase price of vehicle’ as per the invoice and the ‘claim amount receivable’ under the policy. In such a situation, this rider provides for this difference amount.

No Claim Bonus Protection Cover:

Many a times, we do not register a claim because we do not want to lose out on our existing high rate of No Claim Bonus (NCB) bonus. In this rider, if the policy holder makes not more than one claim during the entire policy period, then the existing NCB can be retained. This cover protects your No claim bonus.
Similarly there are many more covers which turn out to be very useful, especially in case of expensive cars. For example,

  • Repair of windshield glass, fibre, plastic and rubber parts
  • Emergency transport and hotel expenses cover

There are only a few select companies who offer these add on covers. Tata AIG General Insurance Company offers most of these riders. Cholamandalam MS, HDFC Ergo and Royal Sundaram are other insurers who also have some of these benefits.

In 2008, I took a ULIP which had some health insurance with it in the same policy. It offered cover for me and my wife. I am paying an annual premium of Rs. 35,000 out of which close to Rs. 15,000 gets deducted as charges. Now the money out of my premium which gets invested is too little. The product is called Tata AIG life InvestAssure Health and I have taken it for a term of 20 years. Is there a good benefit under this plan or is it all fancy on paper? Should I continue this policy? Will they deduct such high charges from me every year?
Renuka Deshpande, Dadar East

Tata AIG InvestAssure Health is a ULIP plan with health benefits. It is an expensive plan because it combines the benefit of ULIP and medical insurance. Now the premium you pay is split into two parts – one which is the premium for your ULIP and the other which is for your health insurance. Yes the premium allocation charges in the first two policy years are high and then it comes down for 3 years up to the fifth year. But then from the sixth year on there are no premium allocation charges.

Now the health benefits under this plan are good. A whole lot of surgeries are covered and there are many hospitalisation benefits. If due to inflation the prices rise, the policy has an inbuilt consideration for the same.

A good thing is that there is a bonus component in this policy which will be given to you at the end of the term. If you had taken this from the perspective of moderate returns and good health benefits, then keep it. But if you are looking at this policy from a pure investment angle, then you may surrender the same because there are much cheaper policies available now.

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