Purchasing motor insurance is more than a legal mandate. It is a step you take to protect your vehicle’s needs against accidents, damage, and regular servicing, among other things. In addition to the basic coverage, you can also opt for supplementary coverage to enhance it. One such optional cover is the daily allowance add-on.
The daily allowance add-on provides coverage that compensates you for transportation costs in the event your insured vehicle is under repair for a certain period. For each day that your car is in the garage/ repair shop, you will receive a daily allowance. Like all other add-ons, the daily allowance rider would incur a slight additional premium; however, the coverage would be worth it.
Take the example of Shilpi Mishra, a 34-year-old advocate from Delhi, whose vehicle was under repair due to a road accident. For that entire week, Shilpi had to take a cab to commute to her office. Thankfully, she had opted for a daily allowance in car insurance. Her commute expenses were covered by the insurance provider.
There’s a lot more to this coverage that you must understand before deciding whether or not to purchase the daily allowance add-on cover. This article explores the fundamentals of daily allowance coverage for you.
Daily Allowance Coverage: An Overview
Daily allowance in car insurance, also known as garage cash cover, is an optional coverage that you can add to comprehensive car insurance. It provides compensation to the vehicle owner for expenses incurred during the daily commute, in the event their insured vehicle is under repair due to an accident or other damage.
By opting for this add-on coverage, you can protect yourself from bearing the cost of taking cabs or alternate vehicles to complete your daily tasks. Typically, a company offers a pre-specified daily allowance limit.
What Are the Benefits of Daily Allowance Add-On Cover?
The primary purpose of purchasing car insurance is to establish a safety net against financial hardship resulting from an unfortunate incident involving the insured vehicle. Daily allowance add-on cover facilitates financial protection under a car insurance policy. Here’s how:
1. Financial Protection
Daily allowance coverage offers financial protection for the vehicle’s owner. The cost of commuting, during a prolonged repair period, can be thousands in a metropolitan city. However, with this coverage, the insurance company offers compensation for expenses incurred when taking alternative vehicle options during such repair periods, providing financial protection.
2. Convenient Commute Options
Finding an alternative commute option can become a significant challenge due to financial barriers and the rising cost of public transportation in developed cities. In such situations, the daily allowance add-on cover steps in to offer flexibility in arranging for daily travel. Whether you want to book a taxi or take shared rides, your insurer will cover the expenses.
3. Enhanced Coverage on Existing Policy
Daily allowance is an add-on cover that you can add to your existing motor insurance plan. What does this mean? Enhanced coverage under the same policy without having to pay a huge amount, as add-ons typically come with a minimal additional premium.
Things to Know About the Daily Allowance Add-On
In addition to understanding the benefits, it is important to be mindful of the limitations and exclusions as well, such as:
1. Limited Applicability
Daily allowance is offered under pre-listed and specific conditions. For instance, the insurer may not provide compensation for short repair durations or routine vehicle servicing. Additionally, insurers typically offer compensation for up to a few days, which is also limited to once during a policy tenure.
2. Pre-Specified Amount Limit
Typically, the daily allowance add-on cover comes with a pre-specified amount limit. Any expense incurred that exceeds the pre-specified amount limit is not compensated by the insurance provider. This might become a challenge in some cities where the cost of public transportation is exponentially high.
3. Unauthorised Repairs
If the insured vehicle is undergoing a repair that is not authorised by the insurance provider or is being repaired at an unauthorised garage, the insurance company might not offer any compensation under the daily allowance add-on cover.
Note: Please read the policy document carefully to understand the specific limitations and exclusions more clearly.
How to Raise a Claim under Daily Allowance Add-on Cover?
Raising a claim under the daily allowance add-on cover is super simple and convenient. Here’s how you can raise a claim under car insurance policy:
1. Imitate the Insurer
Inform your insurer as soon as possible after your vehicle has been sent to a network garage for repair.
2. Provide Documents
Ensure that you provide complete documents, including policy documents, repair details, and garage bills, for a hassle-free approval process.
3. Wait for Verification and Approval
Once you have submitted the documents, the insurance company will complete the verification process and provide an approval for your claim.
4. Compensation Disbursal
Upon final approval, the compensation amount is disbursed.
Who Should Consider Purchasing Daily Allowance Add-on Cover?
Daily allowance add-on cover has several benefits, but it's essential to determine whether it's the ideal rider for you. Here’s a list of individuals who can benefit the most from this add-on:
- Frequent Traveller: Individuals who travel frequently or daily for office, college, daily chores, etc.
- Single Car Dependency: Individuals or families who have single-car dependency.
- Individuals in Metropolitan Cities: Individuals who reside in metropolitan cities or any other city where the cost of daily commute is high.
Smart Tips for Policyholders
As a policyholder, it is essential to periodically review your policy to adjust coverage to meet your changing needs. Here are some smart tips to keep in mind:
1. Pick the Right Amount
The coverage amount under your motor insurance plans needs to be in alignment with your vehicle's needs. For instance, if you opt for the daily allowance add-on cover, the pre-specified amount limit must align with the cost of commuting you might incur in your city.
2. Pick Add-Ons Smartly
Add-ons can appear appealing at first glance. However, you must select such add-ons wisely to ensure alignment with the car insurance premium amount, benefits, and your needs.
Read this blog to know about the different add-ons in car insurance.
Summing Up
Daily allowance coverage is a reliable and robust add-on for your existing motor insurance policy. It is primarily designed to bridge the gap between the duration of vehicle repairs and the expenses incurred for commuting. A small addition to your existing policy that provides financial protection and peace of mind during times of need.
If you still haven’t updated your car insurance with such modern-day add-ons, this is your chance to explore car insurance plans in India and make your policy more robust. With Generali Central, you can explore car insurance plans that are most suited to your needs.
