Ever thought of getting paid an allowance when your car is in the workshop? It’s not as improbable as it seems. For, general insurance companies now have policies that provide a daily allowance for up to 10 days when the car is damaged.
Tata AIG General Insurance Company, Cholamandalam General Insurance Company and Royal Sundaram General Insurance offer daily cash allowance (DCA) with their motor insurance policies. This is what these policies have to offer.
Product: DCA is an add-on benefit one can take with a motor insurance policy. In this, the owner gets a fixed daily allowance for a certain number of days in one policy year if his/her car has to be taken to a workshop.
Gaurav Garg, managing director and chief executive officer, Tata AIG General Insurance, said: “All claims where the repair time is more than three days are eligible. The benefit is available up to a maximum of 10 days through the one-year policy period, irrespective of the number of claims.”
Cholamandalam General Insurance provides this benefit for a maximum of five days in a policy year. The amount paid to the vehicle-owner under this plan varies. The company has two plans — one that pays Rs 500 a day and the other Rs 1,000. Tata AIG’s a daily allowance depends on the size of the car. Small cars are eligible for Rs 600 a day; mid-size cars Rs 800; multi-purpose or sports utility vehicles get Rs 1,000; high-end cars get Rs 1,200.
The facility is provided from the time the car goes to the workshop and till the time it comes back. But the payment does not start the very first day. “The first is spent in checking if the claim is valid,” said a Cholamandalam spokesperson. The cover begins from the next day, when an alternative transport arrangement has to be made. However, there are a few exclusions.
“Claims solely for windscreen or glass damage do not qualify,” said Garg. Damage suffered while the driver is under the influence of alcohol/drug, does not have a driving licence or is a minor, routine servicing and air-conditioner repair do not come under the purview of these policies.
Premium: Opting for a DCA will increase the outgo, but not significantly. Tata AIG said the premium varies depending on the segment of the car and ranges between 0.3-0.5 per cent of the sum assured or the current value of the insured car.
According to Cholamandalam, “The customer has to pay 5 (for Rs 500 per day) to 40 per cent (for Rs 1,000) extra over the normal car insurance premium. The extra cost also depends on the type of the car. (See table)
Financial experts say while it is a good addition because of the incremental increase in the premium, many feel it only helps small car owners. Kartik Jhaveri of Transcend Consulting said: “Getting Rs 1,000 a day makes sense for small car owners, who pay Rs 3,000-4,000 a month towards premium. It is not for those who have high-end cars.”
