Car and Bike Motor Insurance for Fire: Here are the key points you should know

No specific plan

According to insurance experts, damage due to fire is covered by a comprehensive plan for two wheelers or cars.

“There is no specific plan especially for covering your vehicle against fire. You just need a  comprehensive plan which will ensure that the cost of repairing the damage will be taken care of,” Deepak Yohannan, CEO, MyInsuranceClub, told FE Online. 

“Any damage due to fire is covered if you have a comprehensive insurance plan – two wheeler or car. Damage to your vehicle due to fire will not be covered in case you only have third party insurance cover. So the most important thing is to purchase a comprehensive over – third party plus own damage,” he added.

What comprehensive plans offer

There are two types of motor insurance available in India, one is mandatory third party insurance and other is standalone damage policy. 

“While third party covers don’t have fire cover, standalone policies do cover damages caused by fire. If a policyholder is worried about fire damages, they can opt for a third party with the added benefit of fire cover,” Rakesh Goyal, director, Probus Insurance said. 

A comprehensive motor insurance policy typically covers instances of fire among other mishaps such as theft, own damage, personal accident, and natural disasters like earthquakes, cyclones, landslides etc. 

Key points to make your vehicle ‘fire-proof’ with insurance 

• Buying just a third-party cover will not help in case the policyholder’s vehicle catches fire. Such a policy is there just to protect the insured from losses if their vehicle were to damage any third-party or property.
• Only a comprehensive motor insurance product which includes the own damage cover will pay for claims arising out of fire unless an exclusion is specifically mentioned in the policy document.  
• Any modifications made to the vehicle which tampers with the basic specifications and may have contributed to the fire can become a cause for repudiation of the claim. It’s advisable to get modifications done by an authorized dealer to ensure the additional parts can be added to the IDV of the vehicle.
• Damages due to mechanical defects like short-circuiting, overheating, oil leakage, or fuel seepage may also not be covered. Needless to say, if the fire was caused by the policyholder’s own negligence or on purpose, the claim will be rejected.
• Policyholders should always look at what is not covered in the policy. Mechanical defects like short-circuit, oil leakage or overheating are excluded from the policy. 
• When the fire damages occur outside the geographical area is also not covered in the policy. 
• Fire caused by policyholders’ own negligence or on purpose is not covered in the policy. Vehicle should not be intentionally put on fire to make a claim. This will surely lead to a rejection of your claim. 

How much claim can you get?

Yohannan said that the overall costs will be linked to the cost of repair and replacement of parts. “Costs incurred by the owner would be the same as it would be if the damage was due to any other accident. Apart from the compulsory deductible amount, the depreciation rate will be applied to parts which need to be replaced. The rate of depreciation will depend on the age of the vehicle.”

In case the vehicle is damaged beyond repair, it would be declared as Total Loss and the IDV mentioned in the policy will be paid.

“In case of fire, the maximum a policyholder will get is the Insured Declared Value (IDV), depending on the extent of damage, minus the depreciation and deductible. In case an EV catches fire, the claim pay-out will also depend on the warranty issued by the OEM,” said Aditya Kumar, Vice President, Motor Underwriting, Digit Insurance.

Kumar further said that the insurer will either accept or reject the claim, and if it’s accepted, the policyholder will receive the claim amount and depending on the extent of the damages, this can be the repair expenses or the vehicle’s IDV (in case of total loss).

The pay-out will also depend on the policy terms and conditions.

Many times, vehicle fires only damage a part of the vehicle, but in other cases, it can be completely burnt, or the cost of repair might be more than 75 per cent of the vehicle’s Insured Declared Value. 

“Insurer will pay the maximum amount of your IDV. This is called a “total loss” and in such cases, your motor insurance will reimburse you with this same IDV amount minus any deductibles and depreciation if any,” said Goyal.