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Car Insurance

Motor Insurance – Why the Cheapest Might Not Be the Best  

Cheap is expensive in the long run.

Remember that road-side wallet you bought that started tearing within a month? Or those shirts you got for 250 bucks each that started losing their colour after the first wash? Going for a relatively cheaper option does give some sort of satisfaction at the moment of purchase. However, it doesn’t take much time for you to see yourself regretting those cheap purchases. Let’s be honest! We all know that cheaper things cost more in the long run.

While we can make exceptions considering our priorities, there are some things in life that cannot be compromised on in terms of quality and the benefits that they offer. Motor insurance is one of them. Policy buyers, in their quest to buy the cheapest car insurance, often underestimate the importance of relevant add-ons and skip buying them. In the long run, this costs them far more than the little money they saved by not getting relevant add-ons. 

When You Lose Your Car Key

Let’s say you own a car in the INR 8 – 10 lakh range. The key to this car costs close to INR 15,000 if you want to replace it. However, you need not have to worry about any damage to the key initially since the Key Replacement add-on was present in the initial insurance cover you purchased along with the car. However, when you renewed your car insurance, you decided to go without this add-on because you are looking for the cheapest car insurance.

Don’t make this error. Losing one’s car key or damaging it by dropping it or rough use is a recurring phenomenon among many car owners. If you end up losing or damaging your key, it will cost you not less than INR 15,000, which is quite a large blow. On the other hand, the Key Replacement add-on would only have cost you INR 150 or lower a year in your insurance policy, and the insurance company will pay the whole amount for a replacement key.

Do the math. INR 15,000 for a new key is 100 times the annual cost of this add-on. This means that you are getting a good deal for 100 years or so by opting for this add-on. Go for it. 

A Flood-damaged Engine

If water enters your vehicle’s exhaust pipe (as it does during floods) and you turn the key in the ignition, the engine of your vehicle will seize. What’s more, as soon as you turn the key in the ignition, you stand to lose your insurance privileges in most car insurance policies.

To repair the engine damage, the engine block has to be opened completely. If your car is in the INR 8 – 10 lakh range, these repairs will cost about INR 1 lakh. However, if you have the Engine Protection add-on, costs incurred on repairing a damaged engine will be covered. This is a must-have add-on for car owners residing in areas that experience heavy rainfall, such as Mumbai.

Zero Depreciation Rider

Every time a car insurance claim is made, pay-outs are made after considering the reduced value of certain parts of the car, which is derived based on their rate of depreciation. For example, the rate of depreciation in the case of plastic, nylon, and rubber parts is 50%. In this case, if a part of your car (made of plastic, nylon, or rubber) needs replacement, and say it costs INR 4,000, then 50% will be paid by your insurer while the remaining 50% (that is, INR 2,000) will have to be borne by you.

However, by adding the Zero Depreciation rider to your policy, you can rest assured that you will be reimbursed the full value of the car part to be replaced, no matter what material it is made of.

Yes, all these riders will certainly give a slight push to your overall premium amount. However, do not forget that not having these riders will cost you even more in the long run. So, what do you think, isn’t it time to say no to cheap car insurance?

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