Here's Why It is Wise to Invest in EMI Protector Add-on Cover

Posted on: Jun 14, 2024 | 3 mins | Written by: HDFC ERGO Team

Here's Why It is Wise to Invest in EMI Protector Add-on Cover

EMI protector cover gives additional coverage for your car loans in case of unavoidable circumstances. With an EMI protector you can relax, knowing that if any accident or theft should happen to your vehicle and you are unable to use it, your loan repayments to be made towards your car are safe. It is therefore highly advisable to everyone who owns a car to consider taking an EMI protector add on the cover which will help protect one from the financial strain of such calamities. Let us discuss more about this below.

What is an EMI?

EMI in car insurance means equated monthly installments where the car loan is paid monthly instead of at once. It is very difficult to pay the entire price of the car and thus, many banks and financial institutions lend the amount. They charge an interest on this and allow the client to pay a fixed amount every month. This amount is a part of the principal and interest and depends on the duration of the loan.

What is an EMI protector add-on cover?

An EMI protector add-on cover is one of the significant features of Car insurance. This is an added value for it affords the insured a security and a warrant that they can be shielded from some financial loss if they sourced for a loan in order to purchase a car.

When you select an EMI protector car insurance add on covers, the coverage is as a result supposed to protect you from such situations that would prevent you from making EMI payments as and when due. For instance, in cases of an accident or theft leading to massive damages to a vehicle, or other catastrophes such as robbery or natural disasters that lead to the destruction of a car the EMI protector helps capture eventual outstanding EMI for a period.

This cover is useful when the loan consumer finds himself or herself in a situation where he or she cannot make EMI payments due to the car being involved in an accident thus needing repair or replacement.

How does an EMI protector work?

EMI protector add-on is a value-added insurance cover that policy providers offer under motor insurance in India. It is established to give the car owners insurance to offset any loan borrowed to purchase cars. Let us understand how the EMI protector works with an example.

Consider a situation where you have taken a car loan and you have purchased a car by paying EMIs along with the option of an EMI protector add-on cover. Unfortunately, a few months later you are involved in an accident which leads to damage to your car. Now during this phase, you have to incur extensive car repairs while you are unable to use your car during this period.

This is where the EMI protector cover will play a role. In most cases, it is provided for a specified period of time depending on the terms of the policy. In this period if your car requires any repairs but you are unable to make the EMI payment, then the EMI protector cover will take care of it.

For example, assume your car loan repayment EMI for your monthly payment is Rs.30,000. The EMI protector cover will let you get the EMI amount if the vehicle is kept in the garage for more than 30 days. This ensures that you do not struggle to make the EMI payments while the car is being repaired and hence gives you a chance to recover without the risk of defaulting on the loan as well. However, if you opt for EMI protector plus add on cover, you can even get 50% of the first EMI if the vehicle is kept in garage for 6 to 15 days. If the period for repair exceeds 15 days, insurer will pay full EMI for that particular month. Furthermore, the insurer will pay the 2nd and 3rd EMI if the vehicle has been in the garage for more than 30 days and 60 days respectively.

It is essential to understand that insurance that covers the EMI protector would be required in case of instances like accident, theft, fire, natural calamities or any other event that has been mentioned in the policy.

How to submit a claim for the EMI protector add-on cover?

1. The first stage in the process of raising a claim involves the policyholder having to inform the insurer about the car’s damage

2. After you inform the insurer, he/she will send a loss assessor or surveyor to evaluate the extent of damages done to the car

3. Once the surveyor has given his consent, the mechanics in the workshop can commence fixing the car.

Note – this means that in order to make a claim under EMI Protector Add-on, the damage that was done to your car must be one which will take between 21- 30 days to repair the car, as verified by the surveyor.

When filing a claim under the EMI Protector Add-on, the following documents will be required

1. Your certified schedule of EMI that you have obtained from your lender

2. EMI payment history of the last 12 months

3. Other documents include a claim form duly filled with repairs estimate, PAN card, Aadhar Card etc.

In this case, when all the relevant paperwork has been forwarded to the insurer, he will then validate and process the claim in accordance with the agreed policy provisions.

What is covered under the HDFC Ergo EMI add on protector?

If the Insured pays an additional premium the company will compensate as follows.

1. In the event that the insured vehicle is parked and stored in the garage in the event of an accident and if it takes more than 6 days for the repairs, then the company will pay an amount which is equal to 50% of the EMI

2. The waiting period would commence from the following day of the occurrence of the event whereby the insured vehicle heads to the garage for repair or from the day when the repair parts are available as confirmed by the repairer and whichever is later

3. A maximum of two claims can be availed during the policy period

What is not covered under HDFC Ergo EMI add on protector?

1. If spare parts are not available, that number of days would not be accounted for

2. Failure of non-cooperation by the Insured / Insured’s authorised person

3. No payment shall be made for any charges, penal interest or penalty

Conclusion

It is recommended to buy an EMI protector add on cover along with comprehensive insurance so that one can get secured in the case of loss of employment or medical problems. The extra coverage helps protect the policyholder’s income and especially the loan EMIs. It helps keep you covered when you get fired from work or fall sick and do not have the income to pay for the service. When you use the EMI protector add-on cover, you are guaranteed that there is no stress and the insurance company takes care of the loan when you are unable to use it.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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