Here’s Why Motor Insurance Policy Will Not Pay Full Cost of Your Car Damage
Buying a motor insurance policy is necessary for every car owner irrespective of the model of the car bought. The motor insurance guarantees financial security when the car faces any unfortunate accident and provides the necessary coverage for the damage repair. However, the policyholder should not expect complete coverage as per the premiums served. This is because, a part of the premium has to be compromised due to a number of deductions during policy claiming, which omits a chunk of the assured sum. In such cases, the insured individual has to pay the remaining amount (or the deducted amount in this case) from his own pocket. One should not forget, that the motor insurance policy will only provide that much financial coverage as is settled according to the policy. If the expense of repair crosses the assured sum, the insured individual has to bear the sum along with the compulsory deductions mentioned as per the policy terms. The insuring company might end up charging several deductions, some of which are compulsory and some are not. Hence, it is highly advisable that the insured should double check the deductions and only agree to the compulsory ones. Besides, the company might also include depreciation charges on the assured sum.
If you buy a motor insurance policy, the first thing that will be made clear is the amount deducted under the compulsory deduction term. Compulsory deductions are mandatory deductions which are always settled during availing the policy and remains fixed till the date of policy claiming. If you need to claim 20,000 INR for own damage of your car and the compulsory deduction has been stated as 3000 INR, then in that case, the company will provide the necessary coverage only after deduction of 3000 INR. Any excess amount necessary for the repairing shall be fulfilled by the owner himself/ herself.
This is the excess amount of deduction voluntarily chosen by the policyholder to be deducted by the company. There is no compulsory requirement and the choice is completely on the individual policy owner. The advantage, in this case, is that, the company offers additional discounts and deals to the policy bearers who opt for voluntary deductions. However, the declared amount for voluntary excess will be deducted along with compulsory deductions from the assured sum.
Excess Wear & Tear
Much of the motor insurance policy value depends on the condition of the car and its parts. After repeated use, the parts of the cars might face wear and tear, especially the tyres. This is also the reason why insuring companies deduct a chunk from the assured sum because the exaggerated expenditure in repairing worn out parts will mean relatively lesser profit to the company. Besides, the depreciation costs in such cases also depends on the age of the car. The assured value keeps on decreasing with increasing age of the car. This is because with every passing year, the parts of the car will be subjected to greater wear and tear and greater damage and thus much lesser profit for the company. In such cases, the percent of depreciation in car insurance might range from zero for cars claiming policy within 6 months of buying, to 50% for cars ageing more than 10 years.
How to Claim the Most of The Premium Value from Motor Insurance Policy?
Practically, it is not possible for any policyholder to claim the entire sum of the premium paid, as there will be several charges paid for administration, taxes, etc. However, one can easily recover a huge portion of the assured sum by smart planning and strategic approach right at the time when one decides to buy motor vehicle insurance. The insuring company offers certain add-ons to the policy which unbelievably helps the insuring individual in saving a lot. If an individual avails a zero Depreciation add-on, he/she will not have to pay the entire sum of deduction, but only a small share which is completely affordable. Besides, there are other add-ons as well which helps the policyholder in saving deductions due to wear and tear in engine parts or consumable parts like nuts and bolts as well as fuel cost.
It is always possible to get persuaded by the insurance agents and end up buying the wrong one or expensive one. Hence, the policyholders are highly suggested to only buy the best motor insurance policy after thoroughly comparing the benefits offered. Besides double checking the benefits offered, one should also check the list of deductions imposed and never blindly sign any policy.