2017-08-30 20:30:00 UTC
In the light of the floods in Mumbai currently, Insurers are expecting a record spike in motor vehicle claims. We decided to take a look at common motor claims, and how they are usually handled.
Now, you may have a comprehensive motor policy, but it is important to know that even then, you may not get all your losses covered. Here’s how your motor claims are likely to be affected:
Damage to an engine is generally not covered under any policy, unless you have taken an engine protector, or hydrostatic lock add-on cover.
This add-on covers you for the damage caused when water enters your engine (through the exhaust pipe, usually because vehicle is submerged). Engines that seize due to water ingression while driving also fall under this category.
It is important to note that if you are driving, and your engine seizes due to water ingression, you shouldn’t restart the engine. This will allow the garage to just suck out the water and dry out the engine. Starting it will cause the water to ingress further and complicate matters.
This damage accounts for most of the motor vehicle insurance claims in flood stricken areas.
The cost of the engine protector add-on depends on age, make, model and cubic capacity of the vehicle. It can cost between INR 1500 to INR 3000. You can check out our website and see how much it costs for your car. Be advised that some insurers will insist on an inspection before granting you the add-on, and that it may not be available for cars older than 5 years.
Also, if you have this add-on, claims take a while to settle, as the damage has to be assessed by surveyor and insurer after dismantling the engine in the workshop.
In case your vehicle has been completely washed away, the claim will usually be categorised as a total loss claim. Post filing of FIR and confirmation from the police and surveyor that vehicle is not recoverable( usually within 90 days) , the insurer will pay you the Insured Declared Value(IDV) mentioned in your policy, minus your deductible, and depreciation.
Your IDV will be depreciated depending on how much time has elapsed since you bought the policy. Usual rate is 10% per year, although this may vary. Your deductible will also come into play, but that is usually negligible at this scale.
Being submerged can cause a lot of other damage to your vehicle, especially to your interiors, upholstery, air conditioning, tyres, sound systems, etc. Cleaning of these parts is something most comprehensive policies will cover, but the problem arises when these parts need replacement.
The decision for replacement is made by the surveyor’s report. The cost of replacement is covered, but only after deducting depreciation. This is due to the principle of indemnity- you have lost an old car part, hence you should be compensated for an old car part. The insurer achieves this by adding depreciation to the cost of a new part. Depreciation is charged as given below:
1. Damage to rubber, nylon, plastic, fiber glass, batteries, air bags and wooden parts – 50%
2. Damage to tyres – 50%, but tyre damage is only covered if the vehicle was also damaged.
3. Glass – generally no depreciation is charged for glass
The above numbers are indicative, a few insurers charge less depreciation for certain parts; but by and large, this is accurate.
So essentially, the insurer will not cover 50% of the cost of replacement of these parts.
Factory fittings(that come with car) like air conditioning and music system are covered under insurance.
But custom or aftermarket fittings, that you fit after you buy the car, like entertainment systems, custom seats, CNG kit etc. are not covered, unless you mention their value while buying insurance, and pay the extra premium.
Consumables are items that are used either completely or partially to fix your car like grease, lubricants clip, bearings, distilled water, engine oil, oil filter, fuel filter and brake oil etc.
They are not covered under a standard policy. There is an add-on that covers this cost, called consumables cover.
However, in many cases, even with the add-on, the loss won’t be made good unless the parts are replaced within three days from the date of loss.
Have any other query about your motor claims? Ask us in the comments, and we’ll reply to you! Stay safe, stay insured.