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Home > Expert Blog > What is Consequential Loss

Sep 2014

What is Consequential Loss

Monsoon is here and incidents of water logging leading to vehicle breakdown, traffic jams are making news headlines again. Even as the administration and we as citizens make efforts towards a trouble free monsoon, invariably there will be days when we come across such situations in the coming weeks.
As vehicle owners, we can prepare better by ensuring that our vehicle is serviced and has undergone pre-monsoon check up. Apart from this, it is extremely important for us to depict the right behaviour when it comes to situations of water logging on roads.

Today, more and more cars as well as motor bikes are installed with high technology equipments to ensure a safe and comfortable drive. However, the same technology also brings its own disadvantages when it comes to the monsoon, especially in situations of driving through water logged areas. You may have driven or seen other motorists driving through water and the car engine suddenly stalling. This is a phenomenon known as hydrostatic loss and can impact any vehicle including those with high technology and equally high price tags. It is important to understand the reason behind this phenomenon and how to avoid your car from getting stalled in a water-logged area.

As you would be aware, vehicle engines work on the principle of combustion. This involves continuous intake of air supply to compress and ignite the fuel in the engine cylinder to create the necessary force to drive the engine. In high end cars, this suction capacity is multiplied several times given the need for high power. While driving through a water logged area, water can find its way into the engine through the air intake valve. Since water cannot be compressed, it leads to a situation where the engine cylinder rod bends or breaks leading to engine seizure. The problem gets aggravated when the driver tries to forcibly turn on the vehicle or crank the engine resulting in heavy damage to the engine.

It is important to note that engine damage due to hydrostatic loss is classified as a consequential loss as per motor insurance regulations and is not covered under a regular motor insurance policy. This is because the damage is a consequence of a certain action resulting from having cranked the engine and not an outcome of an uncertain event. The cost of engine repair in this case would be minimum Rs 1 lakh for a small car and around Rs 3 lakh for a mid-size car. For SUVs and premium vehicles, it can be upwards of Rs 10 lakh.

So how do we avoid such incidents? As they say, prevention is better than cure. It is best to avoid driving your vehicle through water logged areas. If you were compelled to do so and the vehicle was to stall, avoid cranking the engine under any circumstances. Instead, call your insurance company or a towing service provider to get the vehicle towed away safely to a garage or service station. The critical point is to avoid trying to move your vehicle by trying to restart the engine.

In addition to the preventive approach, one can also consider purchasing an add-on cover that insurers now offer to cover such losses. With this cover, you can avoid paying for the damages that occur to the vehicle engine if the same stalls while driving through a water-logged area. Priced at only around 10% of your motor insurance cover, it can save you from incurring heavy expenses towards engine repair from hydro-static loss. It is important that you avail this cover at the time of purchasing or renewing your motor insurance policy.

Monsoons bring relief from the heat but also bring their set of problems, especially when on the road. It is best to show precaution and be equipped with the right cover to financially secure ourselves from high losses arising out of vehicle stalling in water logged situations.

So if you were holding any of the above misperceptions, rest assured, go ahead and purchase a comprehensive student travel insurance right here before you leave for your dream destination.

Posted By - Mr. Amitabh Jain, Head - Motor Underwriting & Claims, ICICI Lombard

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