Types of Endorsement in Car Insurance
Endorsement is an amendment to the insurance contract which changes the existing terms and conditions of the original policy to imbibe the new terms and conditions in the insurance contract. An endorsement may add or delete the coverage under the car insurance contract. Whenever and endorsement is done, the insurance company issues an endorsement copy as a proof of endorsement to the insured. The endorsement copy has to be read in line with the original policy copy. The endorsement policy copy is considered as the final agreement in addition to the original policy copy; the endorsement wordings overrule the wordings in the original policy copy at the time of claim.
For example if the original policy copy is issued without Bumper to bumper add-on/rider but the insured had taken a midterm addition which is endorsed in the endorsement copy, in case of any claim the claim amount will be settled on the bumper to bumper basis as the endorsement is done for the same. Bumper to bumper car insurance covers the depreciation costs associated with the part at the time of claim. Endorsement in car insurance can be Financial or Non financial; financial endorsement involves the payment of addition premium while the non financial endorsement doesn’t require any extra premium payment. Let us understand the types of endorsements under financial and non financial endorsements.
Any Endorsement which requires additional premium to be paid is known as the financial endorsement in the car insurance. Let us understand the types of financial endorsements provided under your car insurance policy.
Add-ons or Riders, as the name suggests indicate the extra coverage to your car insurance policy in addition to the coverage offered by the regular comprehensive car insurance policies.
Midterm addition of riders in the policy copy is permitted by the insurance companies only after satisfactory pre inspection report. For instance if the customer has not taken or missed out taking bumper to bumper rider in his comprehensive car insurance policy at the time of renewal, he can request the insurance company to pass an endorsement adding the bumper to bumper add-on. The premium for addition of rider or add-on has to be paid by the insured and the risk start date is taken as the date of premium received by the insurance company and not the original policy start date.
Name Transfer/ Ownership transfer:
Name transfer or ownership transfer is the common type of endorsement in car insurance where the ownership is transferred from one customer to the other due to the sale of the car. Since the car insurance policy contains No claim bonus which is offered to the owner/driver and not the car, the NCB amount (if any) has to be paid to the insurance company and a nominal fee for name change had to be paid post which the endorsement will be passed by the insurance company.
No Claim Bonus is the discount offered on the Own damage section of your car for your driving behaviour. Less the number of claims, high would be the NCB over a period of years.
For example, Mr.X has a car with 20% NCB and has sold it to Mr. Y. Now Mr. Y has to get the name change done in the policy copy as he is the rightful owner of the car and any damage or loss to the car affects him directly. For the name change to take place, a nominal fee has to be paid to the insurance company. After the payment, the insurance company passes an endorsement with the owner name as Mr. Y.
Removal of Anti Theft Device & AAI Membership:
Anti theft devices are those which are fitted in the car and lock the steering or ignition of the car thereby preventing them inaccessible for the thieves and others without a key. Having an approved anti theft device can reduce the premium in your car insurance policy. In case of addition or deletion of the anti theft device during the policy term, the same changes can be made in your car insurance policy with an endorsement. If the anti theft device is added, then the premium is refunded to the customer and in case the anti theft device is removed, premium is charged from the customer.
Members of the Automobile Association of India are eligible for discount under the car insurance. Automobile Association of India is an association which is formed in India and has branches in more than 150 countries to provide assistance to the riders. Apart from this service the members of the association are also eligible to get Breakdown assistance, Passport assistance, Driving permits and other miscellaneous services on paying a nominal premium. The endorsement is required if you take up the membership of Automotive Research Association of India (ARAI) or any other recognized automobile association, or your existing membership expires or is revoked.
Inclusion of CNG/LPG kit:
Most of the cars in India support bi-fuel system; petrol/diesel is the main fuel while the CNG/LPG is the secondary fuel. There are models which support this but are not manufactured as bi-fuel, in which case customers get the CNG/LPG kit fitted to their cars. If the CNG/LPG kit is fitted in the car during the insurance policy period then there would be need for an endorsement in your existing insurance policy.
This endorsement will be charged by the insurance company as the addition of CNG/LPG kit increase the risk from the view point of the insurance company. The endorsement is carried out only after the satisfactory inspection report.
Addition/ deletion of Electrical/Non electrical accessories:
Electrical accessories are the extra fittings that are done by the customer which are not there in the car fitted by the manufacturer. These electrical or non electrical accessories include High-end stereo system, LCD Screen etc. which are fitted by the customer as per his taste and convenience. These extra fittings can also be insured by declaring a separate sum insured/ IDV for them and paying extra premium. These fittings are to be insured as there would be the risk of theft and fire damage.
In case these accessories are added, then you have to inform the insurance company and get the endorsement done by paying additional premium depending on the IDV/value declared for these accessories.
Change in Engine & Chassis Number:
Engine and Chassis number are unique for each car and are mentioned in the RC copy as well the insurance policy copy for identification of the vehicle. In case of wrong entry of Engine and Chassis number in the policy copy you can get it corrected from the insurance company by passing an endorsement stating the correct engine and chassis number of your car.
Some insurance companies may ask for inspection report if the Engine and Chassis number is to be changed altogether instead of minor changes. This is done to prevent the fraud from happening at the time of claims. This type of endorsement doesn’t require any premium to be paid and is carried out by the insurance company on the request of the customer
Change in Registration number:
Any changes in the Registration number mentioned in the policy copy can be carried out without paying extra premium to the insurance company. The insurance company issues an endorsement mentioning the correct registration number in the policy copy.
The registration number in the RC copy should be reflecting in the insurance policy copy as well to prevent any issues at the time of claim settlement.
Change in Name, Address & Contact details:
An endorsement can be carried out to make changes in the Name of the insured, Address of the insured and other contact details in the insurance policy copy if they are wrongly mentioned or if customer wants to make changes as per his updated details.
It is important to get the address and contact details such as mobile number and email updated to get the relevant notifications and communications from the insurance company.
Change in Car variant, cc, make and model, fuel type:
An endorsement can be issued by the insurance company to make changes in the variant of your car or make, model and fuel type if it is wrongly mentioned in the insurance policy copy.
For instance you have a Maruti Ciaz Petrol car but by mistake your agent had issued the insurance policy with the Make model as Hyundai Creta Diesel, then this can be corrected by passing an endorsement by the insurance company instead of cancelling and issuing a new policy with the correct details.
Change in nominee:
Correction in the nominee details can be availed from the insurance company with an endorsement. If you want to add or delete the nominee in your insurance policy, a declaration is to be submitted to the insurance company to make the necessary changes as per your requirements.
The main reason to issue endorsement by the insurance companies is to prevent the issue of cancelling and reissuing new insurance policy copy every time a change is to be made. Passing an endorsement is the easy thing that can be done by the insurance company in a policy year instead of cancelling and re-issuing the insurance policy with the correct details.
We at www.policybachat.com have a team of agents to help you with your endorsement requirements.