Every insurance product comes loaded with industry jargon that can make the process of buying a policy intimidating. It is compulsory by law to have at least a third-party liability car insurance in India, in addition to which you can opt for comprehensive, extended coverage. This will involve you dealing with and making decisions about additional riders, terms and damages. To make the process easier for you, here’s a rundown on the terminology you absolutely need to know before buying a policy..
Know about the car insurance terms from below pointers.
1. Insured Declared Value:
What is IDV? IDV is the maximum amount you can claim in case of loss or theft of your car. It should ideally reflect an amount close to the current market value of the car so that the insurer can compensate you for your actual loss. The premium you pay for the car insurance also depends on the Insured Declared Value of the vehicle.
2. Own Damage Premium:
Own Damage Premium is the premium you pay to avail an insurance cover equal to the IDV, in addition to the Third Party Liability cover for protection against events outside of your control. For example, if your car is involved in an accident, the own damage cover compensates you for expenses incurred to repair replace damaged parts.
3. Zero Depreciation Cover/Depreciation Waiver:
The usual policy insurance companies follow is deducting depreciation from the value of the car. Zero depreciation cover means that this standard policy is scraped off – the car is valued at a higher price and you get a higher claim amount. This also, however, translates into steeper premiums. The depreciation waiver works in a similar fashion: the insurance company deducts an amount on the damaged parts towards depreciation. If you avail the depreciation waiver cover, the insurer will not deduct this depreciation and you will be entitled to the full price of the parts replaced.
4.No Claim Bonus (NCB):
What is NCB? No Claim Bonus means you are eligible for a discount on your premium if you haven’t made any claim in the last policy year. This is a reward for you on renewing your policy when you have been using your car cautiously.
5.Third Party Cover:
Third Party Liability Cover is mandatory by law when you’re buying a car. This cover protects the vehicle owner against any financial liability as a result of death, physical injury or damage to the property of a third party.
6.Personal Accident Cover:
An additional rider to the policy, a Personal Accident cover is a financial cushion for you against accidents causing accidental death or permanent disability. If you get in an accident, your car isn’t the only thing that requires immediate attention. Often, the bills from your personal injury may exceed those to repair your vehicle.
7. Comprehensive Cover:
Comprehensive car insurance cover protects you against any accidental loss or damage to the car caused by a number of unforeseen events like theft, strike, fire, explosion, natural calamities, burglary, etc. The mandatory Third Party Liability too is covered under this.
8. Cashless Garage:
This facility is provided by the insurers who have a network set up with garages across the country. For example, car insurance plans available on Finserv MARKETS, has a network of 4,000+ cashless garages where you can avail the services under the policy free of cost, only paying if the expenses exceed the limits covered under the policy.
9. Break in Insurance:
As the name suggests, this occurs when your policy lapses and you forget to renew it. In order for the policy to be renewed after such a break, vehicle inspection is carried out.
10. Roadside Assistance:
The Road Side Assistance (RSA) cover offers you emergency mechanical and electrical services, and also arranges for alternate mode of transportation, towing, arranging for hotel accommodation, ambulance services and changing a flat tyre, among other services.
11. Compulsory Deductibles:
You can choose to co-pay some portion of the claim payable which will bring down your premium payments. For example, if the liability is Rs 5,000 and the compulsory deductible is Rs 1,000, then you will get Rs 4,000 towards the claim. Effectively you are bearing a portion of the claim. This is in place to prevent you from raising frivolous claims.
12. Voluntary Excess:
Taking forward the earlier case, if the liability is Rs 5,000 and the compulsory deductible is Rs 1,000, then you will get Rs 4,000 towards the claim. But if you opt for a Voluntary Deductible of Rs 1500, then the net amount you get is Rs 2,500. You will, in turn, be offered a discount on your premium payments.
Some policies may also call them endorsements. These are changes (usually additions) made to the basic policy to increase/decrease the number of benefits covered under the policy.
14. Windshield Cover:
Pretty self-explanatory, this rider covers the cost of repair or replacement of the windscreen glass, whether front or rear, without having any impact on the No Claim Bonus.
15. Anti-Theft Device:
An anti-theft device reduces the chances of your vehicle being stolen. If you have such a technology installed in your car, it is considered a good practice and rewarded by insurers who offer a discount on the car insurance premium.
Getting yourself acquainted with the policy terms and conditions is even easier online. The car insurance policy, available on Finserv MARKETS protects you against cases of theft, burglary and man-made disasters and covers the legal liabilities, fees and cost of proceedings in the case of third party liability. To check the car insurance premiums for policies available on Finserv MARKETS, use the car insurance calculator. The tool helps you determine the premiums and compare the prices of car insurance plans offered by other insurers as well. That way, you will be able to make an informed decision. A good policy is an important financial protection against accidents and events beyond your control, so keep this glossary handy before getting a policy – remember, knowledge is power.
To know more on Car Insurance and related topics in depth, you can check out these blogs:
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