Motor Insurance: Why Own Damage cover matters during monsoon and the add-ons you should know

Every vehicle owner must have third-party motor insurance, but this mandatory cover protects only against damage or injury caused to other people. Damage to your own vehicle is covered only when you have an Own Damage (OD) policy. Many motorists avoid OD cover because it increases the upfront premium. However, it can provide crucial financial protection when a vehicle is damaged by floods, heavy rain and other natural calamities.

An OD policy can cover exterior and structural damage, including dents and smashed body panels caused by uprooted trees, falling poles or other objects. It can also cover interior and electrical damage, such as water entering the cabin and damaging electronic components during waterlogging.

Coverage and add-ons

Experts say vehicle owners often focus on finding the cheapest premium without considering the extent of protection they may be giving up. One of the first things to check in an OD policy is the Insured Declared Value (IDV), which represents the insurer’s assessed current market value of the vehicle.

Choosing a lower IDV can bring down the premium, but it also reduces the maximum amount payable if the vehicle is stolen or declared a total loss. When repair costs reach around 75% of the IDV, insurers generally treat the vehicle as a constructive total loss. In such cases, the policyholder may receive the IDV while the insurer takes possession of the damaged vehicle, depending on the policy terms.

A Return to Invoice add-on can provide additional protection in such circumstances. Instead of limiting the payout to the depreciated IDV, this cover can help the policyholder receive the original invoice value of the vehicle, subject to the applicable terms and conditions.

Another useful option is Engine and Gearbox Protect. For instance, if a vehicle is driven through a flooded road and water enters the engine or gearbox, the resulting damage may be treated as consequential damage under a standard OD policy. An engine protection add-on can help cover the potentially expensive repairs arising from water ingress.

Experts also recommend considering Consumables Cover, which can pay for items such as engine oil, coolants and lubricants used during repairs. Roadside Assistance can also prove useful by providing towing and emergency support if a vehicle breaks down during the monsoon.

EV owners should consider specialised insurance covers that provide protection against flood-related damage to expensive battery systems.

Mistakes to avoid

Consider a car parked in a flooded basement where rainwater damages the battery. Some vehicle owners may assume the damage is due to normal wear and tear or a mechanical or electrical breakdown, both of which are generally excluded. However, if the damage is established as a result of flooding, it may be covered under the OD policy, subject to the policy terms.

Secondary or consequential damage may also be covered when the policyholder has purchased an engine protection add-on.

Vehicle owners should also inform their insurer about modifications made to the vehicle, including CNG or LPG kits, alloy wheels and electrical accessories. Not disclosing material modifications can amount to misrepresentation and may lead to a dispute over the claim. Whether the claim is affected will depend on the policy wording, the modification involved and the circumstances of the loss.

Exclusions and claim timelines

Policyholders should understand the situations that are excluded from motor insurance coverage.

Common reasons for claim rejection or denial include driving without a valid licence, driving under the influence of alcohol, participating in racing, and mechanical or electrical breakdown resulting from normal wear and tear. Depreciation may also be deducted if the policyholder has not purchased a Zero Depreciation add-on.

There is no single regulatory deadline applicable to every motor insurance claim. The reporting period depends on the terms and conditions of the individual policy.

However, insurers commonly expect policyholders to inform them about an accident or damage within 24 to 48 hours, while some policies may provide a longer window of up to seven days. Checking the policy wording and informing the insurer as soon as possible can help avoid complications during claim settlement.