Everything you ever wanted to know about Package Motor Insurance

  • A package policy is an insurance cover which in addition to covering third party liabilities, covers the insured against damages caused to their own vehicle such as accidental damage, fire, vandalism, acts of god, natural calamities, etc. A package cover comes at a higher premium compared to a plain third-party (TP) cover simply because it offers wider protection.
  • A basic third-party insurance protects the vehicle owner against any liability that could arise when a third-party gets injured or dies in case of an accident. Third party insurance is mandatory by law in order to drive on Indian roads, and hence, most people buy it to adhere to regulatory requirements. However, a package motor insurance covers damages to one’s own vehicle in addition to third-party damages and liabilities.
  • Factors Affecting Motor Insurance Premiums
  • A host of factors influence the premium of package insurance covers. Key factors include:
• Make and model of the vehicle
• Age of the vehicle
• Add-ons opted for
• Customer profile
• City of the customer
Motorists can choose the suitable coverage required for their vehicle. In case of only a TP cover, the premiums are regulated by the Insurance Regulatory and Development Authority of India (IRDAI).

What Makes a Package Motor Insurance Policy Attractive?

    • • Extensive coverage: A package motor insurance provides protection to the insured’s own vehicle, personal injuries to oneself and passengers based on the type of policy chosen. For instance, a package policy will cover the damages caused due to rain or natural disasters like floods and earthquakes. If the vehicle owner has only a third-party cover, they would have to bear the expenses arising out of such events from their own pocket.
    • • Value for money: Car owners can be at ease, as they do not have to fret over costly repair expenses. In fact, if they take add-ons such as depreciation cover and consumables, the only requirement would be for them to pay for the voluntary excess (in the case opted for) and compulsory deductibles during the claim amount. Note that unless the insured has opted for a zero depreciation cover, the depreciation in addition to the deductible would be payable out of pocket.
    • • Relevant Add-ons: Unlike a third-party car insurance cover that gives the applicant limited coverage on their vehicle, package insurance offers enhanced coverage options. Also, it can be further leveraged by opting for add-on covers such as zero depreciation cover, roadside assistance, engine protection and passenger cover etc., at a small added cost.
    • • Option to customize IDV (Insured’s Declared Value): IDV is the current market value of your car. A lower IDV can result in a lower premium, which can be tempting, but it also offers lower coverage in case of theft or loss of the vehicle. New-age insurers offer the benefit of customizing the IDV of the vehicle (subject to prescribed limits) while opting for insurance, and we suggest taking adequate cover.
  • Events Covered Under a Package Insurance Cover

  • Accidental damage: If the insured or the insured’s car suffers any loss due to an accident, a package cover will pay for the damages.
  • Theft: Car thefts are not very common in India. However, a few localities are prone to thefts, and hence, such an eventuality cannot be ignored completely. If an insured’s car gets stolen, they can file a claim for the same if the vehicle is covered under a package motor insurance policy.
  • Damage caused by natural disasters or severe weather: Damages sustained by the vehicle due to natural disasters such as floods, earthquakes, hurricanes, tornadoes, etc., can be covered under a package insurance scheme. People who live in disaster-prone areas would benefit by opting for one such policy. For example, residents that live near the coastal belt can insure their vehicles against damages from frequent cyclones and floods that occur during monsoons.
  • Vehicle damage caused due to civil disturbance: Due to the political instability in certain areas of the country, often, vehicles tend to sustain damages in the event of riots or violent protests. Such damages too are covered under a package policy.
  • Fire: Destruction to the car caused by fire can be recovered by opting for a package insurance policy. Such covers reimburse damages caused due to garage fire, engine fire, and fire caused due to mechanical dysfunction.
What’s Not Covered In Package Motor Insurance
Certain events and incidents may not be covered even if you have a package motor policy. One such example is if your vehicle endures damage due to a collision, then a car insurance claim cannot be made. A few other situations that are not covered under the package insurance cover include:
Electrical or mechanical breakdown: Generally, under the standard motor policy, a mechanical and electrical breakdown is not covered unless the insured can prove that damage was caused due to flooding.
Driving without a license: In case you are found driving the car without any valid driving license, then the damages and/or losses incurred will not be covered.
Drunk driving: A package policy does not cover any losses or damages incurred if you are caught driving the car under the influence of alcohol.
Damage to tyres: It does not cover any loss or damages to the tyres of your vehicle unless it is a direct result of a car accident.
Loss caused due to nuclear weapon/war: It does not cover any loss or damage caused to your vehicle as a result of war, mutiny, nuclear weapon or other such dangers.
Advantages of Opting for Package Insurance
Covering damage to one’s own vehicle: It ensures that the insured wouldn’t need to bear the resulting financial loss regardless of the severity of the damage. However, the cover wouldn’t pay for the exclusions that are explicitly mentioned in the policy document.
Covering third-party damage: In cases where the insured ends up injuring another person due to their negligence, a package insurance policy guarantees the coverage of the loss caused to the third party. This policy covers the non-criminal liability expenses even when the insured is proven at fault and has caused bodily or property damage to a third party.
Provision of add-on covers: Facilities such as zero depreciation cover and engine protection cover are not offered under a third-party liability policy, but they can be bought as add-on covers to ensure maximum protection from unfavorable events.
Procedure of Filing a Package Insurance Claim
Step 1: Registration of claim: The insured would be required to intimate their insurer about the claim. This can be done by visiting the official website or by writing to the insurer via email.
Step 2: Submission of the form and documents: The insured will need to download and fill the claim intimation form with details of the insurance policy, insured vehicle, owner of the insured car, etc. In cases of theft, the insured may also have to submit a copy of the First Information Report (FIR).
Step 3: Survey the damages: In this step, either one can perform a self-survey or opt for a digital survey . If the insured opts for self-inspection, the insurer will require you to share images for inspecting the damages caused to the vehicle. In the absence of a self-survey facility, the damages are evaluated by a surveyor or a workshop partner.
Step 4: Tracking the claim: Once the insurer is informed and the claim form is submitted along with the required documents, the claim is processed. The insured can track their claim status on the insurer’s website or a designated portal.
During renewals, one can also upgrade their policy from a third-party cover to a package insurance policy. The process of renewing car insurance has been made simple by new-age Insurtech companies. After choosing the insurer, policy and add-ons of one’s choice, the process can be initiated by filling in the vehicle details like make, model, variant, registration date and previous policy details.
Despite the extensive coverage a package motor policy offers, you may still wonder if you should opt for a package cover or stick to only a third-party cover. It is more effective to have package car insurance for a relatively new vehicle as the market value would be high, and any potential damage can result in a huge financial burden.
Bottom Line
Even if one does not choose a package coverage, it is important to bear in mind that in case of any unforeseen damage to the car, the steep bill and potential losses will be borne by the individual alone. Hence, it is necessary to weigh the costs of such potential repairs/ fixes against the premium that one would pay towards a package insurance cover. In most cases, opting for a package policy is a smarter option as it covers the insured against most forms of unforeseen events or damages that can be caused to their vehicle.

Source: Forbes

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