Home / Money / Personal Finance /  Why motor insurers don’t cover consequential damages
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Buying a car was the easy part. But then comes the tough  bit—meeting the expenses for damages arising from any untoward accidents. And you had that covered as well, with a motor vehicle insurance policy, or so you thought. And that is where you could go wrong. Consequential damages are not covered by most motor insurers.

Rakesh Goyal, director, Probus Insurance Broker, said, “Consequential damages or losses are a type of collateral damage. Such damage to any part or tangible unit of your vehicle is like an indirect loss that cannot be compensated under your regular motor insurance policy, even if your vehicle is covered." 

For instance, your insurance will cover the expenses for plugging an engine oil leak immediately after an accident.  But if there is a problem later on, after the leak is plugged, causing the engine to stall, it is classified as consequential damage arising out of the accident and will not be covered under your regular motor insurance policy. 

As per motor insurance regulations, insurers don’t cover consequential damages under a motor insurance policy. This is because the damage is a consequence of a certain action and not the outcome of an uncertain event. In other words, consequential damage happens when one uncertain event leads to a series of other events, causing damage that was not the result or outcome of the first uncertain event. 

Pooja Yadav, chief product officer of Edelweiss General Insurance, said, “If an insured car meets with an accident on the road, it will have to be towed to the nearest garage. While being towed, the bonnet can get damaged. Such damages will be treated as consequential damage." 

What to do next

There are several factors accounting for consequential damages, not all of which are under your control. It is impossible to plan for a sudden change in weather, or mistakes committed by other road users and even pedestrians crossing the road suddenly. However, a proper insurance cover with certain add-ons can help you deal with such situations. 

Yadav said, “It is best to avoid driving your vehicle through waterlogged areas. Yet, an engine protect add-on cover can help you avoid paying for damages if the engine stalls while driving through a water-logged area." It will help if you are careful when the vehicle is being towed to the garage. Proper securing of the towing harness must be done and the damaged vehicle towed  away slowly to avoid any consequential damage, says the expert.

Goyal said, “Certain gadgets can also help drivers avoid consequential damage. Driver assistance systems can aid in the prevention of lane-skidding. There are also devices that can help detect objects in a trailer’s blind spot and stop the vehicle automatically to prevent a collision. It enables safe car parking and alerts people to the dangers of collisions that can lead to injuries and significant damage to the vehicle."

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