Everything you need to know about Bumper to Bumper Insurance – Forbes INDIA Advisor

While the Motor Vehicles Act 1988 requires third party cover, a comprehensive policy is recommended for vehicle owners. The reason is simple. With a comprehensive policy, you get coverage against third-party liability and the damage your vehicle may suffer in an accident or due to any natural or man-made disaster.

With comprehensive car insurance plans, you get the option of add-ons. Add-ons are optional and provide additional coverage features that help enhance policy coverage. One such add-on that is widely available with all comprehensive car insurance plans is the zero depreciation add-on. When you add this coverage to your basic policy, you get a 360-degree policy. Also called bumper to bumper insurance policy.

What is Bumper To Bumper Insurance?

Bumper-to-bumper insurance is simply the comprehensive car insurance policy with the addition of zero depreciation added. With bumper-to-bumper insurance plans, the claim amount is higher because the insurer does not deduct depreciation on the parts of the vehicle that have been repaired or replaced.

To purchase the bumper-to-bumper insurance policy, you can choose comprehensive coverage and add zero depreciation coverage to make the policy complete.

Why is bumper-to-bumper coverage necessary?

Although comprehensive, car insurance plans do not cover depreciation due to normal wear and use. As such, in the event of a claim where the vehicle has been repaired, the depreciation accrued on the vehicle parts is deducted from the claim amount. Instead, the garage charges the full amount. In the end, you have to bear the cost of the depreciation that the insurance company has deducted.

As for the rate of depreciation, there is a table based on which insurers deduct the amount of depreciation. This table shows the various parts of the vehicle and the corresponding depreciation on them. look –

These levels of depreciation are significant. You may end up paying more than 50% of the repair costs incurred as the insurer excludes the amount of depreciation. In the case of severe damage, the cost of repairs can easily reach tens of thousands. If you pay for depreciation, you can end up incurring a significant loss. Thus, zero depreciation coverage add-on or bumper-to-bumper insurance policy comes in handy to cover this loss.

Let us understand with the help of an example.

Let’s say you own a car (vehicle age: 12 years) that suffers damage due to a collision. The hood of the car gets significantly damaged and you give the car in for repair. Repair costs are categorized as follows –

When you make a claim for this amount, the insurance company will calculate the allowable amount of the claim after deducting depreciation. So, here is how the claim amount will be calculated –

As is evident, against a claim amount of INR 55,000, you get a settlement of INR 30,500, which also ignores the mandatory deductible, further increasing your out-of-pocket expenses.

The claim amount increases significantly if you opt for the zero depreciation add-on and convert the comprehensive plan to bumper-to-bumper cover. Deduction for depreciation will not happen and you get a claim for the total cost of the repair ie. 55,000 INR. You will only pay the mandatory deductible amount ie. 1000 rupees (assuming the engine displacement of the car is up to 1500 cc). The remaining INR 54,000 will be covered by your bumper to bumper policy.

Advantages of the bumper-to-bumper cover

The bumper to bumper cover gives you the following benefits –

  1. Financial relief and higher claim

Since coverage also covers depreciation costs, your out-of-pocket costs are reduced. As such, you can protect your financial assets and hard-earned income and get financial relief even in the most damaging cases.

Bumper to bumper cover increases the claim amount. A higher damage amount makes your car insurance policy more comprehensive, especially when you own a premium vehicle where repair costs can be very high.

  1. Affordable

The zero depreciation add-on costs a fraction of the car insurance premium. As such, it is affordable. Moreover, the coverage offered far outweighs the small additional premium you have to pay to avail the coverage

  1. Complete security

Finally, the zero depreciation add-on makes your auto insurance policy inclusive. It adds the level of security you’re looking for from coverage and gives you complete peace of mind.

Things you need to know about the bumper-to-bumper cover

While a bumper to bumper policy provides you with a comprehensive coverage scope, here are a few aspects of the coverage that you need to know about –

  1. Availability

The zero depreciation allowance is usually only available for cars and bikes up to 5 years old.

2. Frequency of complaints

Insurance companies can limit the total number of zero depreciation claims they would pay. With most plans, bumper-to-bumper coverage is available up to twice during the policy period. However, many insurers nowadays offer unlimited bumper-to-bumper claims settlements. Such plans have an advantage over regular plans that limit the frequency of claims and are therefore recommended.

3. Exclusions from Coverage

There are some cases where bumper-to-bumper coverage is not applicable. These cases include the following –

Request cases not covered by the policy. For example, drunk driving, driving without a license, etc.

a. Replacing certain parts of the vehicle, such as tires and tubes.
b. Consumables costs.
° C. Mandatory deduction
e. Voluntary deduction (if selected)

4. Total loss or theft:

If the vehicle is a total loss or stolen, the losses you incur are not covered by bumper-to-bumper coverage. In such cases, the claim of zero depreciation would not be applicable.

Tips for buying the right bumper-to-bumper cover

As mentioned earlier, bumper-to-bumper coverage is quite popular and hence is offered by almost every insurance company offering a car insurance plan. So choosing the right bumper-to-bumper cover becomes important, especially when there are so many options.

So, here are some tips to help you buy the right bumper-to-bumper insurance policy for your car –

A. Compare the range

First, compare the scope of the zero depreciation allowance. As stated earlier, some plans limit the number of claims from bumper to bumper, while others do not. So check if there are any coverage limits. Try and choose a plan that allows unlimited bumper-to-bumper claims for maximum protection.

B. Check the premium

The zero depreciation allowance is priced differently by different insurers. So compare and check the premium each insurer charges. Compare the add-on premium with the base policy premium. Choose a plan that offers the most competitive premium to get the best deal.

C. Check the claim process

Nowadays, many insurers have simplified their claims process by introducing features like –

a. epickup and delivery from the doorstep
b. Night repair
° C. Application-Based Claim Suggestion
e. Fast approval and settlement, etc.

Check out these claims related features that insurers offer. Choose a company with the simplest claims process so that your vehicle is easily repaired and you get the settlement as soon as possible.

Comprehensive vs. Bumper to bumper cover

A comprehensive policy is one that covers third party liabilities and damages that your vehicle may sustain. On the other hand, bumper-to-bumper policy is comprehensive with zero depreciation add-on. This is the main difference between these two plans. Other differences include the following –

Bottom row

A bumper-to-bumper policy provides comprehensive coverage for your vehicle and increases the claim amount by covering depreciation costs. So the policy is recommended to avoid significant out-of-pocket expenses during claims.

Evaluate the comprehensive coverage offered by different insurance companies and compare the plans on three main parameters – coverage, cost and claims process. Choose the most suitable bumper-to-bumper policy for your car and give it the protection it deserves.

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