Monsoon brings a sigh of relief for many, but it also unleashes a wave of car damage. Floods and waterlogging can transform roads into rivers, especially in metro cities like Mumbai, Delhi, and Bangalore, leading to water inundation. This can severely damage car engines. Heavy rains can also uproot trees and poles, causing dents and other exterior damage to vehicles. But did you know that your insurer can reject your claim in these situations?
When can your motor insurance claim be rejected?
Insurance providers can deny a claim if the damage falls outside the coverage provided by the policy. Hiten Kothari, Chief Underwriting Officer and Chief Actuary, HDFC ERGO General Insurance Company, lists several instances where motor insurance claims can be denied:
General aging, wear and tear: Damage attributed to regular wear and tear rather than a specific monsoon-related incident.
Damage to tyres and tubes, unless damaged during an accident: Tyre and tube damage are generally excluded unless part of an accident, as these parts are more prone to wear and tear.
Coverage limitations: Towing due to mechanical breakdown or engine protection is not included in the standard motor insurance policy.
Pre-existing damages: Claims for pre-existing damages of the vehicle will result in rejection.
Incomplete documentation: Ensure all necessary documents are submitted to the insurer within the stipulated time to avoid claim rejection.
“A comprehensive car insurance, for instance, may cover various types of damages, but it does not cover engine damage caused by water locking, which is very common during the monsoon season,” says Neel Chheda, Senior Executive Vice President & Head – Auto & Actuarial Analytics, TATA AIG General Insurance.
Mayur Kacholiya, Head – Motor Product, Go Digit General Insurance, explains, “While the monsoon itself usually isn’t a reason for a claim denial, certain circumstances could lead to your motor insurance claim being rejected by the insurance company.”
For instance, avoid venturing out during floods. If your car is submerged, do not switch on the engine. This might be classified as contributory negligence, leading to claim rejection. Consequential loss to certain vehicle parts due to water inundation not covered by your policy may also be excluded. Pre-existing damage not part of the claim may not be covered either.
“One should read the policy document carefully and be aware of all the terms and exclusions of the insurance policy,” advises Chheda.
What must you do?
According to Kacholiya, comprehensive motor insurance is your first line of defence, safeguarding your vehicle against various threats. It’s especially crucial in flood-prone areas where add-on covers can provide additional protection.
“Engine Secure is one of the most important add-ons, as it covers engine damage due to water ingression. Tyre Secure Cover is another essential add-on, providing protection against damages to tyres. Roadside Assistance (RSA) is a must-have during the monsoon season, offering towing services, emergency fuel, alternate key facilities, and accommodation if necessary. Additionally, emergency transport and hotel expenses, consumable covers, and personal accident covers are also prominent add-ons that provide valuable coverage during this time. For Electric Vehicles, Electric Surge Secure add-on covers the EV against short-circuiting, arcing, and leakage of electricity including ingress of water,” says Chheda.
What add-ons should you consider?
Location: If you live in coastal or flood-prone regions, comprehensive protection against monsoon-related damages is essential.
Vehicle usage: Consider how frequently and in what manner you use your vehicle during the monsoon season.
Value and age of your vehicle: Older vehicles may require different coverage types compared to newer ones.
Specific risks: Assess risks such as waterlogging, engine damage from water, and the likelihood of accidents due to slippery roads.
Expense of add-ons: Ensure the cost of add-ons aligns with your budget while offering sufficient coverage.
Timing: Remember that add-ons cannot be added midway through the policy and can only be added during policy renewal.
“Verify the insurer’s network coverage, especially in areas you frequently drive, and ensure it includes a broad and reliable network. Also, look for additional benefits like rental car assistance or accommodation if repairs are needed, which insurers like HDFC ERGO offer,” suggests Kothari.
Factors influencing car insurance premium
Several factors influence the calculation of car insurance premiums:
1. Car’s make and model: Different cars have varying repair costs and spare parts prices. Generally, the higher the car’s cost, the higher the insurance premium.
2. Policy coverage: The type of coverage you choose affects the premium. Options include Third-party, Own Damage, and Comprehensive plans, each with different costs.
3. No claim bonus (NCB): This is a discount for not filing a claim in the previous policy year. The NCB can be transferred between insurance companies and increases for each claim-free year, up to a 50% discount.
4. Insured declared value (IDV): The IDV is the market value of your car. Higher IDV results in higher premiums as it represents the amount the insurer will pay in case of total damage or theft.
5. Add-ons: Additional benefits like Zero Depreciation, Engine Protect, and Roadside Assistance increase the premium.
6. Discounts: Insurers offer discounts for safe driving, early policy renewal, and other good behaviours, which can lower the premium.
7. Compulsory personal accident (PA) cover: Mandatory in India, this cover provides up to Rs 15 lakhs for accidental injuries or death, increasing the premium.
8. Goods and Service Tax (GST): An 18% GST is applied to the final premium amount for all general insurance policies in India.
For instance, this is what insurance plans for Maruti Baleno (2019 model)
IDV: Rs 4,00,000
OD premium: Rs 2,500 – Rs 2,800
Nil deposit: Rs 1,500 – Rs 1,800
24/7 roadside assistance: Free
Engine protection cover: Rs 750 – Rs 1,500
Consumables: Rs 300 – Rs 1,000
Insurers also have curated plans. Here’s what Tata AIG offers:
Gold plan: Glass, fibre, plastic, and rubber repairs; key replacement; emergency transport and hotel expenses; personal belongings loss; roadside assistance.
Silver plan: Glass, fibre, plastic, and rubber repairs; depreciation reimbursement; consumable expenses.
Coral plan: Glass, fibre, plastic, and rubber repairs; key replacement; emergency transport and hotel expenses; personal belongings loss; roadside assistance; depreciation reimbursement.
Pearl plan: Glass, fibre, plastic, and rubber repairs; key replacement; emergency transport and hotel expenses; personal belongings loss; roadside assistance; depreciation reimbursement; engine secure.
Pearl plus plan: Includes Pearl Plan benefits plus consumable expenses and tyre secure.
Sapphire plan: Glass, fibre, plastic, and rubber repairs; key replacement; emergency transport and hotel expenses; personal belongings loss; roadside assistance; depreciation reimbursement; consumable expenses; tyre secure.
Sapphire+ plan: Sapphire Plan benefits plus engine secure.
Sapphire++ plan: Sapphire+ benefits plus return to invoice and electric surge coverage.
Emerald plan: Glass, fibre, plastic, and rubber repairs; key replacement; emergency transport and hotel expenses; personal belongings loss; roadside assistance; depreciation reimbursement; return to invoice; consumable expenses; tyre secure.
e-Sapphire+ plan: Similar to Sapphire+ with electric surge coverage.
e-Sapphire++ plan: e-Sapphire+ benefits plus return to invoice and electric surge coverage, excluding engine secure and daily allowance.
Here are motor insurance plans by other insurers:
Add-on insurance covers for Monsoon (actual price will vary based on several factors mentioned above)
ICICI Lombard
Plan type: Comprehensive
Claims settled: 96.75%
Price: Rs 2,417
Reliance General Insurance
Plan type: Comprehensive
Claims settled: 98%
Price: Rs 2,422
Bajaj Allianz
Plan type: Third Party
Claims settled: 98.5%
Price: Rs 2,094
Oriental Insurance
Plan type: Comprehensive
Claims settled: 94%
Price: Rs 2,455
Cholamandalam insurance
Plan type: Comprehensive
Claims settled: 96%
Price: Rs 2,094
National Insurance
Plan type: Third Party
Claims settled: 93%
Price: Rs 2,094
What common mistakes do people make with motor insurance?
“Many people underestimate the coverage needed, failing to recognise the specific risks associated with their location and vehicle usage. Not thoroughly checking the policy’s terms and conditions can lead to unexpected claim rejections. Missing or delaying policy renewals can leave the vehicle without coverage when it’s needed most. Finally, not keeping updated records and documentation can hinder smooth claim processing,” says Chheda.
Kacholiya adds, “People might focus solely on getting the cheapest policy without fully understanding what it covers and does not cover. This can lead to claim denials when the specific damage isn’t covered by their policy. It’s crucial to read your policy documents carefully and understand types of coverage, perils covered, exclusions, limits, and deductibles.”
How can you avoid common motor insurance mistakes?
Select a comprehensive cover: Protects your vehicle from damages and losses due to natural calamities.
Choose the right insured declared value (IDV): Reflects the current market value of your car, balancing premium costs and coverage.
Consider add-on covers: Provides additional protection against specific situations.
Renew your policy on time: Avoid lapses and potentially losing out on your No Claims Bonus (NCB).
Provide accurate information: Honesty in your application and claim forms is crucial to avoid claim rejections.
Don’t ignore the no-claim bonus (NCB): Failing to transfer the no-claim bonus when switching insurers or not understanding how to retain it, can result in a loss of accumulated discounts.
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