Full cover on high-end cars may be a stretch

Annadurai's BMW 530-D sputtered to a halt on Anna Salai on December 2 and had to be towed away . Annadurai had taken an insurance policy from New India Assurance for `20 lakh (invoice price of the car was `25 lakh) with the first year premium of `20,000. “The insurance company is now denying claims saying that the vehicle was damaged in waterlogging.But I will pursue the case,“ he said.
Annadurai isn't alone. The recent floods in Chennai took a heavy toll on luxury cars, with as many as 700 vehicles ­ mostly BMWs, Audis and Mercedes Benz ­ getting destroyed. Worse, claiming insurance for the damaged cars is proving to be difficult. During the first year, the policy size (insured declared value) for luxury vehicles is calculated as 95% of the ex-showroom price.In subsequent years, depreciation comes into play . During natural calamities like floods, if the car gets fully submerged and badly damaged, the claim is settled on total loss (declared value minus depreciation and other policy excess).
A typical motor insurance policy covers all car parts like upholstery , gear box, steering wheel and engine. “The motor policy for luxury cars covers inbuilt accessories like music systems. But for any new additions, the user would have to take a separate cover,“ B Shiva, general manager and certified broker at insurance consultancy, EasyInsurance India said.
While flooding and inundation of vehicles are covered under motor insurance, if one cranks up the engine after water ingress, the chances of you getting a claim become bleak.This is because insurers would not be able to gauge whether the damage has been caused by inundation or sub sequent cranking (see box).Insurers also urge luxury car buyers to buy additional topup motor plans like engine protection cover as engine blocks are the costliest and get no depreciation cover.
To help car owners affected by the floods, manufacturers like Audi and Mercedes Benz are offering some free services as well as discounts and price benefits. Said Roland Folger, MD & CEO, Mercedes Benz India: “We have decided to acquire special parts from Germany and Singapore by air and not pass this extra shipping cost to the customers. This will result in faster repairs. Mercedes-Benz India also is offering discounts for spare parts.Daimler Financial Services India is working on faster processing of insurance formalities of its financed cars and will waive off late payment charges for November and December rental payments for Chennai customers. Also for the damaged cars with total loss early termination fees will be waived.“
Others like Audi are offer ing free towing services. “We transported these vehicles to other dealerships near Chennai for quicker repair and delivery. Audi Chennai procured extra space to repair and park the vehicles,“ a company spokesperson said. Audi also mobilised manpower from other dealerships across India to offer assistance and ensured availability of spare parts at its warehouse. The company is also offering a special price benefit to its customer (owner as well as the insurance company).