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

Although the Motor Vehicle Act of 1988 requires third party coverage, a comprehensive policy is recommended for vehicle owners. The reason is simple. With an all-risk policy you have coverage against civil liability and the damage that your vehicle may suffer in the event of an accident or any natural or man-made calamity.

With comprehensive auto insurance plans, you have the option of add-ons. Add-ons are optional and provide additional coverage features that help enhance the scope of the policy. One such add-on, which is popularly available with all comprehensive auto insurance plans, is the zero depreciation add-on. When you add this coverage to your base policy, you get a 360-degree policy. It is also called a bumper-to-bumper insurance policy.

What is bumper to bumper insurance?

Bumper-to-bumper insurance is simply the comprehensive auto insurance policy with the zero depreciation add-on added. Under bumper-to-bumper insurance plans, the claim amount is higher because the insurer does not deduct depreciation for 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 all-inclusive.

Why is a bumper to bumper cover needed?

Although comprehensive, auto insurance plans do not cover depreciation due to normal wear and tear. As such, in the event of a loss where the vehicle is repaired, the depreciation incurred on the parts of the vehicle is deducted from the loss amount. Contrary to this, the garage charges the full amount. In the end, you must pay the cost of depreciation that the insurance company has deducted.

When it comes to the depreciation rate, there is a table based on which insurers deduct the depreciation amount. This table shows the different parts of the vehicle and the respective depreciation on them. Have a look –

These depreciation rates are considerable. You could end up paying more than 50% of the cost of repairs incurred, since the insurer excludes the amount of depreciation. In the case of serious damage, the cost of repair can easily run into the tens of thousands. If you pay depreciation, you may end up suffering a considerable loss. Therefore, zero depreciation add-on coverage or a bumper-to-bumper insurance policy comes in handy to cover this loss.

Let’s understand with the help of an example.

Suppose you have a car (vehicle age: 12 years) that is damaged due to a collision. The hood of the car is severely damaged and you hand over the car for repairs. Repair costs are classified as follows:

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

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

The amount of the claim increases considerably if you opt for the zero depreciation add-on and convert the comprehensive plan to comprehensive coverage. Deduction for depreciation would not occur and you get a claim for the full cost of repairs ie INR 55,000. You would only pay the mandatory deductible amount i.e. Rs.1000 (assuming the engine capacity of the car is up to 1500cc). The rest INR 54,000 would be covered by your bumper to bumper policy.

Bumper to Bumper Cover Benefits

A bumper to bumper cover gives you the following benefits:

  1. Financial relief and superior claim

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

Bumper-to-bumper coverage improves the amount of the claim. A higher claim amount makes your auto 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 auto insurance premium. As such, it is affordable. Plus, the coverage offered far outweighs the small additional premium you have to pay to take advantage of the coverage.

  1. complete security

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

Things You Should Know About Bumper to Bumper Cover

While the bumper-to-bumper policy gives you a comprehensive scope of coverage, here are some aspects of the coverage you should know about:

  1. Availability

The zero depreciation add-on is generally available only for cars and bicycles that are up to 5 years old.

2. Frequency of claims

Insurance companies could restrict the total number of zero depreciation claims they would pay. In most plans, full coverage is available up to two times during the policy period. Today, however, many insurers offer unlimited bumper-to-bumper claim settlements. Such plans have an advantage over regular plans that limit the frequency of claims and are therefore recommended.

3. Coverage exclusions

There are some cases where the bumper to bumper cover would not be applicable. These cases include the following:

Instances of claim that are not covered by the policy. For example, drunk driving, driving without a license, etc.

a. Replacement of specific vehicle parts, such as tires and tubes.
b. Cost of consumables.
C. Mandatory deductible
d. Voluntary deductible (if elected)

4. Total loss or theft:

If the vehicle is totaled or stolen, the losses you incur would not fall within the scope of bumper-to-bumper coverage. In such cases, the zero depreciation claim would not apply.

Tips for Buying the Right Bumper to Bumper Cover

As mentioned above, bumper to bumper coverage is quite popular and is therefore offered by almost every insurance company that offers a car insurance plan. Therefore, choosing the right bumper to bumper cover becomes important, especially when there are so many options available.

So here are some tips to help you shop for the right bumper-to-bumper insurance policy for your vehicle:

A. Compare range

First, compare the scope of the zero depreciation add-on. As noted above, some plans limit the number of bumper-to-bumper claims, while others do not. So please check for coverage limitations. Try and opt for a plan that allows unlimited bumper-to-bumper claims for maximum protection.

B. Check the premium

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

C. Check the claim process

Today, many insurers have streamlined their claims process by introducing features such as:

a. Dhome pick up and delivery
b. night repairs
C. Notice of claim based on the application
d. Quick approval and liquidations, etc.

Check out these claims-related features offered by insurers. Choose a company with the simplest claim process to get your vehicle repaired easily and get a settlement as quickly as possible.

comprehensive vs. bumper to bumper cover

An all-risk policy is one that covers the responsibilities against third parties and the damages that your vehicle may suffer. On the other hand, a bumper-to-bumper policy is comprehensive with a zero depreciation add-on. This is the main difference between these two plans. Other differences include the following:

Bottom line

A bumper-to-bumper policy provides comprehensive coverage for your vehicle and increases the amount of the claim by covering the cost of depreciation. Therefore, the policy is recommended to avoid considerable out-of-pocket expenses at the time of claims.

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

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