Ramesh Pathania/Mint
Ramesh Pathania/Mint

Motor insurance covers primary and not consequential damage

If an accident causes an engine oil leak that leads to engine seizure, it will be excluded

I own a car which is used only in my farm and we do not take it out on the roads. Can I get this car insured? If so, what will be the cost of premium?

—Akhilesh

You must insure your car. It is mandatory that you at least purchase motor insurance that covers third party liability. This covers the legal liability of damaging property and injuring people.

Even though your car is used only in the farm it is still susceptible to theft, fire and so on. Cover these risks by purchasing a standard comprehensive motor insurance for third party liability and own damage. The premium cost is typically between 1,000 and 2,000 a year. Premium for own damage depends upon the type of vehicle and its age. If your car is part of commercial activity on the farm then get a commercial motor insurance.

I will be going to Australia for higher studies and will take an education loan for this purpose. What are the different kinds of insurance policies that can be taken to pay back the loan in the eventuality that something happens to me?

—Bharat Ved

Buy a term and an overseas student health insurance. The term insurance should have a sum assured equal to the loan you have taken. Since you are likely to be overseas for two to three years buy the minimum tenor offered by insurers, 10 years for most but 5 years for some. A 50 lakh cover for 10 years should cost you less than 5,000 per year. It is often difficult for students to get insurance of a higher value. Overseas student health insurance will take care of your medical expenses overseas. You can buy $250,000 worth of insurance for about 10,000 per year.

The car dealer is suggesting that I get a motor insurance rider that covers the engine and gear box. Why is this needed?

—Y. Gupta

Motor insurance generally covers primary but not consequential damage. So, if an accident causes an engine oil leak that leads to engine seizure after a few days then the cost of repairing the leak is covered but the engine seizure is a consequential damage and excluded. When you purchase an engine and gearbox add-on, then consequential damage to these parts is also covered. This is a good addition as the repair is expensive.

I am a mediclaim policyholder for 15 years now. Since 2007 I have been living in London. But I renew my policy regularly. Can I get mediclaim coverage?

—Shantharam

You will continue to get mediclaim coverage but only for treatment in India. If you plan to return to India then you may want to consider increasing your sum assured. After 15 years you are likely to have hit an upper cap in your current cover and that cap will be low.

Queries and views at mintmoney@livemint.com

Close