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NEW DELHI: Did you know that despite having a standard motor insurance policy, you still may have to bear some costs from your pocket when you get your car repaired and claim for reimbursement from the insurer? Besides, you will also lose your No Claim Bonus (NCB) discount for next year.

Take a closer look at costs that you may have to pay despite having a standard motor insurance policy.

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A standard motor insurance policy consists of two components. The first is a third-party insurance and the other is own damage (OD) cover. In India, the third-party cover is compulsory for all vehicle-owners. It basically covers legal liability for damage caused to third party. It can be related to bodily injury, death, and damage to third party property. While the third-party cover does not pay for repair of damage to your car, the OD cover does pay for it. However, OD cover is the non-compulsory part of a standard motor insurance policy

Typically, in case of most OD covers, the insurance policy says, "The insurer will indemnify the insured against loss or damage to the vehicle insured and its accessories which includes car accident."

This means when the vehicle is insured under OD cover, the insurer pays for its damage. However, the insurance cover may not pay for the complete repair cost and cover damages only to an extent.

There are five costs which you may have to bear when settling insurance claims:

1. Compulsory deductible: Has to be mandatorily paid by the insured. It varies from Rs1,000-2,000 depending on the vehicle type. Generally, this amount is pre-specified at the time of buying the policy, depending on the vehicle size, class, and cubic capacity. It is applicable in all motor insurance policies irrespective of the insurer.

2. Depreciation cost: The insured value which is also known as the Insured Declared Value (IDV) of your vehicle is revised every year and is adjusted against depreciation. By doing this the insurer excludes the loss in value that your vehicle has already suffered due to the normal wear and tear in the previous years. “You need to pay this from your pocket. “It usually ranges from 25-30% of claim value," said Animesh Das, head - product strategy, ACKO Insurance.

Note: IDV of 5+ years old vehicles and of obsolete models of the vehicles can be determined on the basis of an understanding between insurer and insured.
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Note: IDV of 5+ years old vehicles and of obsolete models of the vehicles can be determined on the basis of an understanding between insurer and insured.

However, you can avoid paying this cost to an extent by taking zero depreciation policy.

3. Negligence of workshop manager: When you send your car for repair at the network garage, the surveyor asks for all pictures related to damaged parts from the workshop manager which helps them to settle the claim. However, if a manager fails to share some of the pictures with surveyor, the insurer won’t settle the claim for the said parts. For instance, if in an accident, the windshield is damaged and the workshop manager fails to share the picture with the insurer, then you will have to bear the cost of repairing the windshield despite being covered under insurance policy.

4. No claim bonus loss: If you make a claim, you won't get NCB discount next year. “In case you don't claim in a policy period then you get a 20-50% discount on the next accident damage portion premium at the time of renewal, which can be Rs1,000-3,000 for an average 4-5 lakh car," Das said.

5. Other damages: Consumables such as engine oil, nuts, bolts, etc. are also not covered in a standard motor insurance policy.

Also, if the insured vehicle's engine and gearbox is damaged due to water ingression, there are no claims for such damages.

What you should do

Even though you might end up paying some portion of the claim from your own pocket, it is extremely important to have a comprehensive motor insurance policy.

To minimise the cost, you must get in touch with the workshop manager and insurance surveyor while your car is being repaired. It is important to take the list of damage parts from the workshop manager and tally it with the insurer while settling of the claim.

Besides, you can buy add-ons such as engine protection cover, consumables cover, zero depreciation, return of invoice cover, etc., which can help reduce your expenses.

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