Are you tired of feeling like you need a degree in insurance jargon just to understand your car insurance terms and policies? Look no further, because we’ve decoded the mystery for you. Here are the top 10 car insurance terms you need to know before you hit the road (and hopefully never have to use them).
The below are the top 10 car insurance terms that everyone should know:
1.Liability Coverage: This sort of insurance is required in India and protects another person or their property from harm or damage that you may cause while driving.
- Liability coverage, for instance, will cover the other driver’s medical costs as well as any car damage if you are found to be at blame for an accident and it results in an injury.
- Additional expenses related to the accident are also covered by it.
2.Third-Party Insurance: This sort of liability insurance shields you from financial losses in the event that you are judged to be at fault in an accident and are sued by the other party.
- For instance, if you are in an accident and it is ruled that you are to blame, third-party insurance will pay for the cost of any legal bills as well as any settlement or judgement rendered against you.
- It is crucial to remember that third-party insurance only covers losses and injuries to third parties; it does not cover you or your own vehicle.
3.Comprehensive Insurance: This type of coverage includes liability coverage as well as protection for your own vehicle in the event of accidents, theft, or natural disasters.
- For example, if your car is stolen or damaged in a flood, comprehensive insurance will cover the cost of repairs or replacement.
- It also includes coverage for third-party liabilities, and personal accident cover for the owner-driver, and also provides cover for damage caused to the insured vehicle by acts of terrorism, riots or strikes.
4.IDV (Insured Declared Value): In the event of a total loss of your car, this is the most money an insurer will offer.
- The IDV is centered on the year, guarantee, and model of the vehicle, and it’s crucial to obtain a proper IDV to make sure you’re fairly paid in the event of a total loss.
- The insurer will reimburse you the IDV of the vehicle in accordance with the policy, for instance, if your car is written off in an accident.
5.No-Claim Bonus: If you do not file any claims during the term of your insurance, you will earn a discount on your premium.
- You will only need to pay Rs. 5,000 for insurance, for instance, if your no-claim bonus is 50% and your premium is Rs. 10,000.
- This is a reward offered to policyholders who keep a clean driving record and do not file many claims.
6.Personal Accident Cover: This sort of insurance offers cash reimbursement in the event that the policyholder suffers an unforeseen severe injury or death.
- For instance, if you are in an accident and become permanently disabled, personal accident insurance will give you a lump sum payment to help with the cost of your medical bills and lost wages. The policyholder’s unexpected death is also covered.
7.Add-on Covers: Additional coverage options that can be added to a basic insurance policy for an additional cost, such as zero depreciation coverage or roadside assistance.
- For example, zero depreciation coverage will cover the cost of replacing parts without any depreciation, while roadside assistance will provide you with help in case of a breakdown or accident.
- These add-on covers provide additional protection and peace of mind to policyholders.
8.Exclusions: A policy’s exclusions list the particular situations or incidents that are not covered.
- For instance, your insurance policy won’t pay for any losses if you cause an accident while under the influence of alcohol or drugs.
- To make sure you get the coverage you require, it’s critical to comprehend the exclusions before obtaining an insurance.
9.Renewal: The process of extending an insurance policy for an additional term. For example, if you have a one-year policy, you will need to renew it at the end of the year in order to continue to be covered.
- It is important to renew your policy on time to ensure that you do not have a lapse in coverage.
- It’s also a good idea to compare different policies and providers to ensure you are getting the best deal before renewing your policy.
10.Premium: The amount of money that you pay to the insurer in exchange for coverage under an insurance policy.
- For example, if your premium is Rs. 10,000, you will need to pay that amount to the insurer in order to have coverage for your vehicle. The premium is usually paid on a monthly or annual basis, and factors such as the make and model of your car, your driving history, and your location can affect the premium amount.
- It’s important to shop around and compare different policies and providers to find the most affordable premium that meets your coverage needs.
Conclusion on car insurance terms:
Choose your policy wisely and make sure you have the protection you require, it is crucial to comprehend the fundamental concepts used in vehicle insurance.
- Liability insurance, third-party insurance, comprehensive insurance, IDV, no-claim bonus, personal accident insurance, add-on coverage, exclusions, renewal, and premium are some of the terminology covered in this article.
- You can be sure that you have the best insurance policy for your needs and budget by comprehending these words and the coverage they give.
- To make sure you are getting the greatest bargain, it’s also crucial to routinely evaluate your policy and compare it to those of other policies and service providers.