How to pick the right motor insurance for flood damage? Checklist of key features

With floods wreaking widespread havoc in various parts of the country, inundating large cities such as Mumbai, a comprehensive motor insurance policy alone can save you from losses arising from damage to your vehicles due to such natural calamities. The basic third-party insurance offers protection only if your car causes damage to somebody else. If heavy rains turn the roads into rivers, only a comprehensive motor insurance policy will save you from paying out of pocket.

You should have a motor insurance policy that provides a return-to-invoice cover, offers protection for the engine and gearbox, zero depreciation cover, and takes care of expenses related to consumables.

Here is a checklist of the features that a good motor insurance policy should have.

Do standard insurance policies cover flooding?

Many motor insurance policies do not offer comprehensive coverage. So, you should look at the policy details and read the wording carefully before buying motor insurance. “The basic third-party policy, which is mandatory by law in India, only protects you if your car causes damage to someone else. It won’t cover your own car if it gets flooded,” said Sanjiv Bajaj, Joint Chairman and MD, Bajaj Capital.

For good coverage, you need a comprehensive policy. “This is the cover that protects not just against accidents or theft, but also against natural disasters like floods, storms, and landslides,” Bajaj said.

What features should a good motor insurance policy have?

A good motor insurance policy should be comprehensive and offer specific add-ons to cover potential water-related damages. “For an ideal comprehensive motor insurance policy, vehicle owners should look for a plan that covers a wide range of perils, including damages due to accidents, car thefts, third-party liabilities, fire, and natural disasters like floods and cyclones,” said Mayur Kacholiya, Head – Motor Product, Go Digit General Insurance. “You should carefully assess the specific risks in your area and weigh the cost-benefit of each add-on to create a customised insurance shield for your car,” he said.

What add-ons should you have?

While a standard comprehensive policy with ‘Own Damage’ (OD) cover provides a solid foundation, you have to complement it with add-ons to cover specific risks to make it more useful.

For instance, an ‘Engine and Gearbox Protect Cover’ is essential for monsoon-prone areas, as it covers damage from water ingress, which is typically excluded from basic policies. Other valuable add-ons include a ‘Zero Depreciation Cover’ to ensure you receive the full cost of repairs without depreciation deductions.

‘Return to Invoice Cover’ will enable you to get the full on-road price of your car in case of a total loss, and ‘Roadside Assistance’ can help you with emergencies like breakdowns in bad weather. Additionally, a ‘Consumable Cover’ can save you from out-of-pocket expenses for items like engine oil during repairs.

“While a standard comprehensive policy does cover damage from natural disasters like floods and waterlogging, to ensure your car is fully protected, it’s wise to consider specific add-ons like engine and gearbox protection, zero depreciation, consumables cover, roadside assistance, and return to invoice cover,” Kacholiya said.

Do insurers deny claims that arise from natural disasters?

Insurers do not deny claims for flood damage if the vehicle is covered by a comprehensive motor insurance policy. This type of policy usually includes coverage for perils such as floods and cyclones.

While the damage from a flood itself is generally covered, a claim could be rejected if your actions contribute to the damage. “If you try to start a car that has been submerged in water, the resulting engine damage could be classified as contributory negligence, and the claim might be denied. This is because starting the engine can cause water to be sucked into the cylinders, leading to a hydro-lock and catastrophic engine failure,” Kacholiya said.

“Additionally, a claim might be rejected if the damage is not a direct result of the flood but is a consequential loss to parts not covered by your policy, or if the damage was pre-existing before the incident,” he said.

“Problems usually come up only when there are unusual circumstances, like forcing your car through deep water despite warnings, or not having the right add-ons for sensitive parts. But if your policy clearly lists floods as covered, your protection is safe,” Bajaj said.

“It’s crucial to read your policy document carefully to understand all terms, conditions, and exclusions. To ensure a smooth claims process, always submit the claim within the specified timeframe and provide sufficient documentary evidence of the incident and damage,” Kacholiya said.

Is flooding covered for EVs? Are the terms and conditions for flooding different for EVs and petrol/diesel vehicles?

Flooding is covered for EVs, but the terms and conditions are different compared to petrol/diesel vehicles. While petrol/diesel vehicles are at risk of a catastrophic engine hydro-lock, sensitive and expensive electrical components are more vulnerable in EVs. For instance, you can take specific coverage against flood-related damage to EVs that protects the battery pack, electric motor, and charging system.

“It’s crucial for EV owners to opt for specialised motor insurance coverages,” Kacholiya said. “This type of policy often includes additional coverages for the battery, electric panel, and even the vehicle’s charger and charging cable. They also come with EV-specific roadside assistance services, such as arranging for a portable mobile generator, providing a charged swappable battery, towing, and repair assistance,” he said.

“What’s different with EVs is the battery. It’s expensive and sensitive to water damage. That’s why EV owners should take add-ons that specifically cover the battery and electrical parts,” Bajaj said.

Apart from getting the right coverage, vehicle owners must avoid common mistakes such as choosing a policy based solely on the cheapest premium, which limits protection, thereby increasing out-of-pocket expenses.

Do not choose a low ‘Insured Declared Value’ (IDV) just to reduce premiums, as this can leave your vehicle underinsured in case of a total loss. By selecting a comprehensive plan with a well-chosen IDV and supplementing it with relevant add-ons, you can ensure your vehicle is adequately protected, thereby minimising financial burden.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.

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