Bumper-to-bumper Insurance to be Mandatory for Cars: Madras HC

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The Madras High Court ruled on Thursday that ‘bumper-to-bumper’ insurance was to be made mandatory for a new vehicle whenever it is sold. This is set to come into effect from September 1. The court stated that this should be in addition to the coverage of the driver, passengers and the owner of the vehicle for a period extending up to five years. After that period, the owner of the vehicle must be cautious in safeguarding the safety of the driver, passengers, any third parties as well as themselves.

“This court directs that whenever a new vehicle is sold after September 1, it is mandatory for coverage of bumper-to-bumper insurance every year, in addition to covering the driver, passengers and owner of the vehicle, for a period of five years. Thereafter, the owner of the vehicle must be cautious in safeguarding the interest of driver, passengers, third parties and himself/ herself, so as to avoid unnecessary liability being foisted on the owner of the vehicle, as beyond five years, as on date there is no provision to extend the bumper-to-bumper policy, due to its non-availability,” said the Judge.

The Judge was allowing a writ petition from the New India Assurance Company Limited in Avalpoondurai, which was challenging the orders dated back to December 7, 2019, of the Motor Accidents Claims Tribunal, Special District Court in Erode. The insurance company argued that the insurance policy was only an ‘Act Policy’. This means that the coverage would only extend to the risks to the vehicle by a third party and not the occupants of the vehicle itself.

The passing of this order means that accident victims in Tamil Nadu will have greater coverage on their side. Justice Vaidyanathan also made it clear that this order would not preclude the claimants from claiming compensation for the death of the deceased from the owner of the car.

What is Bumper-to-Bumper Insurance and How Does it Work?

This is essentially a type of car insurance that offers you complete coverage of the vehicle, irrespective of the depreciation of its parts. This means that when you do face an accident and have damages that need covering, the insurer will not deduct the depreciation value from the coverage. Additionally, the motor insurer will payout for the entire cost of the replacement body parts for your vehicle. However, this type of insurance does not cover engine damage that is caused by oil leaks or water ingression. There are a few fine-print restrictions such as that as well as restrictions on the number of times you can file a claim in a given year.

While it gives you a wider range of coverage, it should be noted that you will be paying a higher premium for this type of policy. It is at least around 20 to 30 per cent higher in premiums than your basic comprehensive car insurance policy that you might otherwise opt for.

However, there are more benefits to it. For one, it can be availed at the time of policy purchase and renewal. You can also claim the full amount, whereas the payout from a standard insurance coverage is only up to around 40 per cent. It is highly beneficial for new cars or for vehicles with a maximum age limit of three years. The policy can also be availed at the time of the policy purchase or renewal.

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