Daily Allowance in Car Insurance

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Daily Allowance in Car Insurance

Purchasing your personal vehicle comes with a sense of comfort and achievement. From travelling to different destinations to commuting to and from work, your car is your safest and most efficient mode of transport.

However, owning a car also brings about a set of risks and drawbacks with regular use. All car owners today are aware of the mandatory rule of purchasing a third-party car insurance policy to drive in India and receive financial assistance for third-party liabilities.

But what to do when your car is damaged due to unforeseen circumstances and the repair work takes longer than expected? In such cases, add-ons like daily allowance in car insurance come to your rescue.

Let’s understand the need for daily allowance in car insurance, how it works, and the importance of car insurance add-ons.

What is Daily Allowance in Car Insurance?

Daily allowance in car insurance is an add-on cover option available with standalone and comprehensive car insurance policies.

This add-on cover helps a policyholder with due compensation in case their car is stuck at the workshop for an extended period, resulting in added financial pressure and discomfort of daily commutes via public transport.

The compensation amount is fixed, and the purpose of this cover is to ensure you can easily manage your day-to-day commute expenses while your car is repaired.

The payable amount under this add-on is applicable for 10 to 15 days based on the nature of the car insurance claim and other terms.

When you combine this add-on with your base car insurance policy, the repairs must take place at one of the authorised garages by Tata AIG, and the repair work should take longer than 3 days to be eligible for the daily allowance.

How Does Daily Allowance Work?

  • Eligibility - The daily allowance add-on cover is available with standalone and comprehensive car insurance plans only. You must have either of these plans to be eligible for this add-on. Moreover, you must ensure that the repair work is completed at one of the authorised garages.

  • Process for Claim - Once you file a claim at one of the authorised garages for damage repair and the work requires more than 3 days to complete, you can notify Tata AIG and ask for daily allowance add-on benefits. You must, however, buy this add-on beforehand and then request it when needed.

  • Payouts - The compensation for daily allowance is fixed and valid for 10 to 15 days, depending on the kind of repair work required, the number of days required for the work, and other policy terms.

Benefits of Daily Allowance in Car Insurance

  • Financial Support - One of the key benefits of daily allowance in car insurance is the financial support a policyholder receives in order to commute till the car is fixed. This increases their peace of mind and reduces any financial stress as the insurer provides sufficient compensation.

  • Additional Convenience - The daily allowance add-on ensures there is no disruption or delay in a policyholder’s routine, especially when it comes to going to work regularly in the absence of their car.

  • Money Saving - Along with monetary compensation for day-to-day travelling in case your car’s repairs take longer than 3 days, the daily allowance cover allows the insured to save up on the allowance money by choosing a public transport of their choice.

Who Should Choose Daily Allowance in Car Insurance?

  • All car owners who own a single car or have no secondary reliable vehicle for commuting.

  • All individuals who require a car to go to work every day.

  • Individuals who reside in areas that are less populated with public transportation.

  • Individuals who do not prefer taking public transportation due to safety or hygiene concerns.

Key Points to Remember with Daily Allowance

  • The availability of daily allowance add-on cover is limited to standalone and comprehensive car insurance plans only. You cannot combine this add-on with a third-party car insurance policy.

  • The daily allowance add-on is not readily available with insurance policies. You must combine this add-on with your base policy to reap its benefits.

  • Adding daily allowance cover to your base policy will increase the overall premium value of your car insurance policy, making it a little more expensive than the base policy.

  • You must assess the number of claims allowed by an insurer under the daily allowance add-on cover. In most cases, this number is limited to 2-3 times a year.

  • The daily allowance cover is available for 10 to 15 days only. However, if your car is repaired before this period, you will only get cover for the number of days the repair work continues, not the fixed 10 to 15-day period.

Tata AIG Car Insurance Add-Ons

Tata AIG offers a wide range of add-ons to its comprehensive and standalone car insurance plans, allowing customers to increase their policy coverage based on specific needs.

From the convenience of daily allowance add-ons to additional financial support for engine and tyre protection, key replacement support, and much more, all these add-ons increase the customisation flexibility for the policyholder.

Moreover, you do not have to make the decision promptly when it comes to choosing any add-ons with your base policy. For instance, if you do not add the daily allowance add-on at the time of policy purchase, you can add the same a year later during car insurance renewal in just a few steps.

Our website is user-friendly and allows you to perform any policy-related work in a few minutes. Whether you wish to buy or renew a car insurance policy or file a claim, all you need to do is visit our website to get started.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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Can I combine the daily allowance add-on with my third-party car insurance policy?

Can I combine the daily allowance add-on with my third-party car insurance policy?


No, the daily allowance add-on is only available with comprehensive insurance plans with an added premium. You cannot combine this add-on with third-party car insurance.

Is there a limit on the number of add-ons I can add to my base car insurance?


No, there is no limit to the number of add-ons you can combine with your car insurance. Tata AIG offers around 13 different add-ons to increase the coverage of your car insurance plan based on specific needs and concerns.