Does your car insurance cover damage cost caused by floods? Check for eligibility, claim process and hidden clauses

Heavy rains have lashed several parts of India, triggering flashfloods and water-logging in multiple cities. These floods not only disrupt daily movement but can also cause severe damage to vehicles.

Among the most affected regions are Maharashtra, Himachal Pradesh, Punjab and Jammu & Kashmir, where continuous downpour has impacted human lives, damaged infrastructure and left vehicles stranded.

As a car owner, an individual must check with their insurer whether their vehicle insurance policy covers the costs of repairing damages caused by floods. Understanding the scope of coverage, claim conditions, and exclusions can help avoid hefty repair bills.

What types of vehicle insurance cover floods?

There are two kinds of car insurance — third party insurance policy and comprehensive coverage.

“Third party insurance only covers legal liability claims, such as damage caused by your car to another individual or property, whereas a comprehensive policy will cover both third-party damages as well as damages sustained by the vehicle,” said Gaurav Arora, chief reinsurance, underwriting and claims for property and casualty at ICICI Lombard.

A comprehensive policy, if bundled with some necessary add-ons, will cover all kinds of damages to your insured car by natural calamities, such as floods, cyclones, tsunamis among various others. “Some add-ons a customer must consider are road-side assistance and an engine protection cover,” he said.

An engine protection cover will bear all the repair and replacement costs of your car’s engine and related parts.

What can get your claim get rejected?

All comprehensive insurance policies do not come with engine protect option. In most cases it is purchased as an add on. You must get clarity on this from the insurance company. But despite having a comprehensive policy and the engine protect add-on, you may face rejection when you apply for a claim.

“If a car has gotten stuck in the flood, customers try to switch on the car, which may put the car into a hydrostatic lock mode. In that case a comprehensive policy will also not cover any damages because it is deemed that it has been done deliberately by the owner or by the driver,” said Sandeep Saraf from Policybazaar, adding that “It’s advisable to not switch on the car it is stuck in flood.”

Hydrostatic lock mode happens when water enters the car’s engine. Since water doesn’t compress like air, it can cause the engine to stall instantly and even damage internal parts. “If you want coverage for damages caused by hydrostatic lock, then you must opt for the engine protection cover,” he said.

Another possible rejection cause is misdeclaration of no-claim bonus (NCB), which is which is a discount given on your insurance premium for having claim-free years. “If a customer has taken a had a 20% NCB last year and decides to opt for 50% this year, then the claim can get rejected irrespective of the damage cause,” Saraf said.

20% NCB is given in first year and increases with each consecutive claim-free year, capping at 50% after five consecutive claim-free years.

Immediate steps to take as a vehicle owner during floods

If your car is submerged in water or you are driving through a flooded area, certain steps can ensure that your car receives the damage claims.

“Inform the insurer who can then arrange for a roadside assistance and the car can be towed to the nearest workshop wherein a thorough checkup of the car will be done,” Arora said.

“Once the checkup is done and the damages, if any are found and repaired, only then the car should be taken off for driving,” he added.

Road side assistance is mostly covered in the comprehensive insurance policy. However if it is not covered, the customer can purchase an add-on to the policy.

If you have road side assistance included in your coverage, you can still pay an extra amount to get your vehicle towed. “However, it comes at a higher cost, hence it’s recommended to opt for roadside assistance beforehand,” Saraf said.

What are the premiums?

The premiums of such insurance policies are based on multiple factors, such as the vehicle mode, age of the car, the area of residence, among others.

“The type of vehicle that the customer has is one determining factor, as the premium varies for SUV or sedan. The area where the customer lives, if it’s more prone to floods or accidents attracts higher premiums,” said Saraf.

Another determining parameter is age of the vehicle. “The premium decreases as a car ages, since the value of the car also depreciates over time,” said Saraf, adding that “the premium is calculated as a percentage of IDB (market value of the car.”

The final premium also depends on whether you have a no claim bonus in your car or not, plus whether you are taking any add-ons or not.