Buying your first vehicle? These 3 insurance add-ons could save you lakhs later

In India, a personal vehicle is more than just a convenience.

It’s a milestone. A sign of financial progress. A long-awaited reward for years of saving, EMI planning, and careful budgeting. For some, it’s the freedom to explore. For others, it’s the comfort of family travel or the ease of commuting in overcrowded cities.

And it’s not just cars. From hatchbacks and scooters to EVs and premium two-wheelers over 2.3 crore personal vehicles were registered in India in FY24, and a significant share belonged to first-time buyers. This isn’t just about mobility; it’s about aspiration and independence.

But in the excitement of delivery day with the key handover, photos, and congratulatory sweets one critical decision is often made without due thought: Insurance.

Most buyers accept what the dealership offers. It’s usually bundled. It’s convenient. And it carries the comforting label: Comprehensive.

But here’s the truth: comprehensiveness isn’t complete. It often misses three key add-ons that can be the difference between peace of mind and a ₹1 lakh garage bill.

The ₹65,000 Mistake That Taught Him the Hard Way

A young professional. His first hatchback. Months of EMI planning. But just three months into ownership, a careless truck driver scraped the left side of his vehicle. The car also stalled on a flooded road and had to be towed.

The insurance claim didn’t cover:

• Full cost of part replacements
• Engine repair due to water damage
• Full invoice value if the car had been a total loss

Final damage? ₹65,000 from his own savings.
He had insurance — just not the right insurance.

This scenario plays out thousands of times across India every year. The financial setback is avoidable if you know what to add, and why.

Don’t Be Fooled by Labels: “Comprehensive” Isn’t Complete

Many first-time buyers are unaware that standard motor policies don’t automatically include all-round protection. Add-ons — optional covers — are critical to filling the gaps.

Let’s break down the three must-have insurance add-ons for anyone buying or renewing a personal vehicle insurance plan:

1. Zero Depreciation Cover

What it Covers:
Covers 100% of the cost of replacing parts like bumpers, windshields, side mirrors, etc., without deducting for depreciation.

Why it Matters:
The day your vehicle leaves the showroom, depreciation kicks in. A standard policy may only reimburse 60–70% of the part's value. The rest? You pay.

Data Point:
IRDAI notes that nearly 20% of motor claim disputes are related to depreciation deductions that come as a surprise to policyholders.

Best for:
Vehicles under 5 years old, city drivers, or anyone who doesn’t want garage surprises after a minor accident.

2. Engine Protection Cover

What it Covers:
Engine repair or replacement costs due to waterlogging, oil leakage, or hydrostatic lock — none of which are covered by basic policies.

Why it Matters:
Monsoons bring more than just traffic. Waterlogging is a real threat. Repairing a modern engine post-flooding can cost anywhere between ₹60,000 to ₹1.5 lakh.

Data Point:
According to industry insights, engine-related issues are among the top 5 reasons for motor insurance rejections — especially after heavy rains or floods.

Best for:
Owners in metro cities, monsoon-prone states, vehicles parked outdoors, or EVs with sensitive engine parts.

3. Return to Invoice (RTI) Cover

What it Covers:
In case of vehicle theft or total loss, this add-on ensures you receive the original invoice value — including registration fees and road tax — not just the depreciated Insured Declared Value (IDV).

Why it Matters:
Without RTI, the insurer pays the depreciated value — which can be 15–20% less than what you paid, even in the first year of ownership.

Data Point:
In 2023, Delhi NCR alone reported over 44,000 vehicle thefts. Across India, only 1 in 5 stolen vehicles are recovered within the first six months.

Best for:
New vehicle owners (within 2 years), people living in urban areas or high-theft zones, and those purchasing premium models.

But How Much Do These Add-Ons Cost?

Not much. For a vehicle priced between ₹8–10 lakh, all three add-ons together cost around ₹3,000–₹5,000 per year — less than ₹15 a day.

Compare that to:

• ₹1.2 lakh for an engine replacement
• ₹60,000 in depreciation losses
• ₹1.5–2 lakh shortfall in theft without RTI

It’s Not Just Weather — It’s the Roads Too

India logged over 4.6 lakh road accidents in 2023, that’s more than 1,200 accidents a day.

Meanwhile, traffic violations crossed 1.3 crore last year, and 18% of motor insurance claims were either rejected or partially paid, as per IRDAI — most due to exclusions not understood by policyholders.

Don’t be caught off guard.

Before You Drive Off, Ask Yourself:

• Will I get full value for repairs?
• Is my engine protected from rain, waterlogging, or oil leaks?
• If my vehicle is stolen, can I recover the full cost?

If your answer to even one is “No” — these add-ons aren’t optional. They’re your financial safety net.

In Conclusion: Protect the Asset. And the Emotion.

A personal vehicle isn’t just another purchase. It’s effort, savings, and freedom on wheels. It deserves protection that matches the value it holds — not just in resale, but in your life.

So before you roll out of that dealership, don’t just ask for insurance. Ask the right questions.

Because the real joy of driving comes not just from the open road, but from knowing you’re truly covered. Come rain, breakdown, theft… or the unexpected turn life often takes.

(Views are personal; the author is Joint Chairman & MD, BajajCapital)