All About Daily Allowance Add-On in Car Insurance

Daily Allowance Add-on - BimaBandhu

Are you familiar with the term ‘Daily allowance add-on cover’ in car insurance? If not, buckle up as we dive into this crucial aspect that could save you from unexpected inconveniences during car repairs.

Imagine this scenario: Your beloved vehicle is in the workshop for repair, leaving you stranded without transportation. Whether it’s due to a minor fender-bender or a major mechanical issue, being without your car can disrupt your daily routine. This is where the daily allowance add-on cover steps in.

This add-on cover, also known as downtime allowance, can provide a daily allowance to cover your commuting expenses when your car is undergoing repairs. Picture receiving up to Rs 500 per day for a maximum of two weeks, easing the burden of arranging alternate transportation. It can be a lifesaver, especially if your car spends more than two days in the workshop.

However, here’s the catch: the compensation amount and the duration may vary depending on your insurance provider. Each company sets its own terms and conditions, so it’s crucial to understand the specifics of your policy. To qualify for this cover, you must hold a comprehensive car insurance plan, and your vehicle should be undergoing repairs at an authorised garage. This ensures that you reap the benefits when you need them the most, without any unexpected surprises.

In this guide, we’ll dive deeper into the importance of the daily allowance add-on cover, exploring its benefits, limitations, and how it can safeguard you from financial setbacks during unexpected car repairs. 

What is a Daily Allowance Add-on?

Daily allowance add-on provides a safety net in the form of an allowance if the insured car spends more than two days in the workshop for repairs. In India, this allowance typically amounts to Rs. 500 per day for a maximum of 14 days. However, it’s crucial to note that the compensation amount and duration may vary among insurance providers. Some of the requirements include:

  • To qualify for this benefit, your vehicle must undergo repairs at a network garage approved by your insurance company. This condition ensures that you receive the support you need while also maintaining the insurer’s standards of service.
  • This add-on is particularly valuable for individuals heavily reliant on their vehicles, especially in areas where public transportation options are limited. It offers peace of mind and financial relief during times of unexpected car troubles, ensuring that you can continue with your daily routines without added stress or financial strain.

Also Read: How to Use Car Insurance Calculator? 

Benefits of Daily Allowance Add-on Along With Car Insurance

The key advantages of including the daily allowance add-on with your comprehensive car insurance policy are:

  • Convenient Commute

With this add-on, you need not cancel plans or struggle with inconvenient modes of travel. Whether you’re a working professional needing to commute to the office or an individual wanting to maintain your daily routine, this add-on ensures you can continue with your activities hassle-free. No more worrying about taking unnecessary leave from work or missing out on essential errands – the daily allowance add-on can keep you on the move.

  • Money Savings

One of the standout benefits of this car insurance add-on is its cost-saving potential. Instead of digging into your own pocket to cover travel expenses during car repairs, this add-on steps in to foot the bill. Whether it’s cab fares or public transportation costs, the burden is lifted off your shoulders, allowing you to use your funds for other essential expenses.

  • Freedom of Choice

You can say goodbye to being limited by inconvenient travel options with this add-on. You retain the freedom to choose your preferred mode of transportation. Whether it’s opting for a cab, hiring a ride-sharing service, or arranging for alternate means of travel, the decision is yours. 

Recommended Read: All About Return to Invoice Cover (RTI)

How To Buy Daily Allowance Claim Add-on?

This add-on can be acquired alongside both standalone own-damage car insurance policies and comprehensive car insurance policies, offering flexibility and convenience for policyholders.

When it comes to ensuring maximum protection for your vehicle, opting for a comprehensive car insurance policy can benefit you more with protection against damages to your vehicle as well as third-party liabilities.

At the time of purchasing a car insurance policy, policyholders have the opportunity to include this add-on. This ensures that you’re covered for unexpected car breakdowns and repairs from the outset, allowing you to navigate through such situations with ease.

However, if you initially opted not to include this add-on or were unaware of its benefits, fret not. You can still avail of this add-on during the policy renewal process. Whether you’re renewing your comprehensive insurance policy or switching to a new insurer, simply express your interest in adding the daily allowance claim add-on to your policy.

Who Should Opt for Daily Allowance Add-on?

Let’s explore who could benefit most from incorporating this add-on into their coverage:

  • People With Single Car

If you rely heavily on a single car for your daily commute and errands, this add-on is a must-have. Whether you’re a working professional juggling office responsibilities or a busy parent shuttling between school runs and appointments, this add-on can ensure you’re not left stranded when your car is in the garage. 

  • Those Who Avoid Public Transport

In many regions, public transport can be unreliable, unclean, or even unsafe at times. This is why many individuals prefer to avoid it altogether. If you fall into this category, the daily allowance add-on provides a lifeline during unexpected car breakdowns or repairs. Instead of compromising on your comfort and safety by relying on public transport, this add-on ensures you have the means to travel conveniently and securely.

Things to Remember At the time of Choosing Daily Allowance Add-On

  • It can only be opted for alongside an OD cover, meaning it’s compatible with comprehensive car insurance plans and not third-party insurance policies. 
  • Securing the add-on entails paying an extra premium on top of the amount already designated for your comprehensive car insurance plan. While this adds to your overall insurance cost, the benefits it provides during car repairs can far outweigh the additional expense.
  • When purchasing the add-on cover, be mindful of the maximum coverage duration specified in the policy. This dictates the duration for which you’ll receive compensation, either for a fixed number of days outlined in the policy document or until your car is repaired, whichever occurs earlier. 
  • Different car insurance providers impose varying restrictions on the number of claims allowed under this add-on. Some companies limit claims to two per year, while others may permit up to three. Before finalising your purchase, verify with your insurer the maximum number of claims permissible within the policy duration. 


Can I buy the daily allowance add-on for my commercial car?

You can purchase the add-on for both private and commercial vehicles. This add-on provides daily compensation for commuting expenses when your car is undergoing repairs, regardless of whether it’s used for personal or commercial purposes. You can check with the preferred insurer for more information.

Can I purchase the daily allowance add-on in the middle of the policy period?

The option to include this add-on during the policy term varies among insurance providers. While some insurers permit mid-policy additions, others may not offer this flexibility. You can check with your insurance provider regarding their specific policy on adding this cover mid-term. 

Can I still claim for the daily allowance add-on if I forgot to send a written notice to the insurance company after a tree fell on my car?

Unfortunately, to be eligible for a claim, it’s essential to notify the insurance company about any claimable incident as soon as possible. Failure to provide timely notice may impact your ability to claim benefits, including the add-on benefits. 

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