Purchasing an insurance policy can be just the reassurance you need to drive your brand new car without a care in the world. However, what you may not know is that there can be a significant difference between the cost of any repairs and what you actually receive from your insurance provider. It is important to know why this happens and what you can do to not only protect your car, but also your wallet.

Compulsory Deductible

Regardless of which policy type or provider you choose to take the insurance from, there will always be a compulsory deductible amount for every claim you make. This amount that goes out of your own pocket will generally be predetermined at the time of purchasing the insurance.

Depreciated Cost

As your car ages, there is standard wear and tear of its parts. Replacement is normally done on the depreciated value. Hence adding a Zero Depreciation Cover can come to your rescue. With the exception of replacing tires, tubes, and batteries, the cost of all other car parts will be reimbursed in full.

Consumables, and Other Exclusions

Consumables such as engine oil, nuts, and bolts are mostly excluded and can be included by opting for a Consumables cover. In more specific scenarios, accidents caused to internal parts by natural disasters like flood or cyclone are not covered in the standard policy. However, opting for the add-on of an Engine protection cover can help you claim for engine and gearbox damage irrespective of the cause.


What can you do about the exclusions?


In order to minimize the cost of a standard car insurance policy’s exclusions, additional riders can be bought at the time of purchasing or renewing your insurance policy.


The mandatory third-party cover insurance that must be bought with every car only accounts for any damages caused to the property, vehicle, or body of a third party during an accident caused by the insured. However, this fails to consider the likely damage to the insurance holder’s own car and self. This is where a Comprehensive or Package Insure Policy comes in, which not only ensures any third party damages but also the added possibilities of damage or theft of your own vehicle.

Insurance companies can often advertise delivering a ‘total loss’ benefit in the case of a car accident, suggesting a full reimbursement for damages, which is not the reality. ‘Total loss’ of your vehicle describes a scenario when the cost of car repair damages following an accident exceed 75% of the Insured Declared Value (IDV) of the car. The IDV of a car is produced using the manufacturer’s current selling price of the vehicle minus its depreciation. In this case, you could gain the IDV of your car, not the entirety of the car’s replacement price.


The purchase of the Return to Invoice add-on can make all the difference in this situation. Available for obtaining for a car below 2 years of age from its date of purchase, the insurer is liable to pay the difference between the IDV and invoice of the undepreciated value of the car.

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