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Non Life Insurance - Thinking to buy a luxury car insurance? A look at the must have add-ons

10-Oct-2012

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These days, buying a luxury car is not a big deal for many people. Thanks mainly to a host of corporate discounts and easy financing options, many don�t even think twice before purchasing their fancy cars. However, maintaining a luxury car costs a lot. In fact, one of the key issues with high-end cars is the high cost of repairs � even minor damages can burn a hole in your pocket.

For instance, the average claim size of a luxury car owner is estimated to be Rs 50,000. The sum may not be big enough to rob the sleep of many of these car owners. Still it makes sense to buy a comprehensive insurance cover for the vehicle. Buying insurance for luxury cars is quite simple, as most covers are bundled with accessories and other car servicing packages.

Now, as per law, luxury cars need only a third party liability cover as mandated by the India Motor Tariff. However, given the huge bills, their repairs could run up to a lot, and it would, therefore, be wise to look for more a wholesome coverage. There is a limited network of authorised repair workshops for luxury cars and the possibility of getting the damaged parts repaired is low. "As such, the cost of repairs/spare parts can be very high at times.

Hence, it is important that one does a thorough research on the basic policy features as well as the add-ons while choosing a motor insurance policy," says Amitabh Jain, head, customer service, motor, ICICI Lombard. A comprehensive cover with value-added features, therefore, is often recommended by experts. Over the last couple of years, car insurance covers have become highly comprehensive, offering a range of add-ons that are crucial, especially for a luxury car. While ignoring comprehensive insurance would be a mistake, resisting the urge to splurge on all heavily-promoted add-ons is advisable. To strike the right balance, you need to do your own homework.

Here�s some help in understanding the add-ons:

Depreciation Reimbursement

It is a must for every luxury car, according to insurers. Depreciation reimbursement cover offers to settle the full claim without any deduction for depreciation on the value of parts replaced. "Depreciation reimbursement and consumable cover are crucial, as the cost of replacement of parts more prone/exposed to damage is very high and, hence, higher amount of depreciation is to be borne by the insured in case of a claim," says Ramesh Ramani, senior vice-president, consumer lines, Tata-AIG General Insurance. Availing this add-on would be of help particularly when you need to replace highcost parts of your luxury cars.

Engine Cover

Then, there is the cost of repairing the damage to the engine, particularly due to flooding. "Such vehicles are also prone to damage due to water ingress and the cost of repair/replacement of engine is to the tune of 30-40% of the cost of the vehicle. Hence, engine cover must be taken by the owners of luxury cars," says Ramani.

Roadside Assistance

Typically, roadside garages are not capable of handling repair works for luxury cars. The servicing of such vehicles calls for a certain skill set, which is available only with the company-authorised service centres, say insurers. Private towing services are also available for car owners who don�t opt for roadside assistance service as part of the car insurance policy. However, these agencies may manhandle the car, which could lead to further damage even before it reaches the service centre.

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