Maruti Suzuki recalls over 87,000 vehicles: Do recalls affect your car insurance policy?

Maruti Suzuki India (MSI) on Monday said that it was going to recall a total of 87,599 S-Presso and Eeco cars from the market due to a possible defect in the steering system. These vehicles were manufactured between July 5, 2021 and February 15, 2023, according to the country’s largest carmaker. This is being seen as one of the largest recalls of vehicles by Maruti Suzuki in recent years.

The cars are going to be withdrawn for checking and replacing faulty steering tie rods. The carmaker has already issued an official statement stating that the recalls started with effect from July 24, 2023.

Along with the vehicle recalls, many car owners could be concerned about how it may affect their car insurance policies.

How does vehicle recall affect motor insurance policies?

The recall of products could also be a matter of concern for general insurance companies offering car insurance policies. Once a vehicle is recalled due to some manufacturing fault or safety standards, the insurer also covers the product recall expenses, including advertising, shipping costs, and legal liability.

However, the premium for this cover depends on the size of the vehicle, the brand, and the segment that it comes under.  

In case of a product recall, the cost or the loss incurred to the automobile companies are covered under the product liability policy. Generally car manufacturers and automobile component manufacturers mostly opt for product liability that may occur in future, which also include instances like recalling a product. In such cases, the insurance companies generally charge 0.65 to 0.75 per cent of the sum insured as the premium.

However, when a vehicle is recalled it may not impact the insurance policy obtained by the car owners or the customer. The customers may feel the pinch if the carmaker passes on the extra cost towards premiums paid to insurance companies to cover product liability.   

What is a vehicle recall?

In the automobile industry, a vehicle recall takes place in case any sort of defect is detected in its design or operation that could cause harm/danger to the person(s) using it. It could also be related to its performance concerning fuel efficiency, braking, or acceleration.

Notably, this is not the first time that Maruti Suzuki India had recalled such a large number of units. Earlier in December 2019, the company recalled 63,493 units of petrol smart hybrid (SHVS) variants and 1,81,754 units of petrol trims of various models in September 2021.