5 Car Insurance Terms Made Simple

While it is important that you read the policy wordings carefully, and understand the meaning in its entirety, here are a few basic terms that will simplify the task and help you take an informed decision.

Insured Declared Value (IDV)

Need : IDV is the current market value of your vehicle.
Benefits :In a vehicle insurance policy, IDV refers to the highest sum assured payable by the insurer. It is the claim amount you are likely to receive in case of a total loss of the vehicle or an instance of theft.
Remember :Opting for a lower IDV might result in the owner of a vehicle receiving an inadequate compensation.

Own Damage Premium

Need :This is the premium paid to avail a cover equal to the IDV, and forms the major part of your total motor insurance premium.
Benefits : Own Damage Premium covers your vehicle against losses due to natural or man-made calamities like earthquake, storm, fire, explosion, etc.
Remember : Own Damage Premium depends on the model, cubic capacity, geographical zones, etc. of the vehicle.

Zero Depreciation Cover

Need : When you make a claim, standard insurance policies deduct depreciation on replaced parts.
Benefits : If you opt for a Zero Depreciation cover, insurance companies waive off depreciation on such replaced parts. This means that you get a higher claim amount.
Remember : It is generally applicable for the first few claims as per the terms of insurance.

No Claim Bonus (NCB)

Need : It is a discount available when you have not made a claim in the previous year.
Benefits : Lowers the insurance premium to be paid while renewing a policy.
Remember : Motorcar owners sometimes avoid registering a claim for minor damages, as they would miss the NCB for the next year, which can be a significant amount. In addition, NCB is generally transferable from one company to another.

Third-Party Cover

Need : It is compulsory to avail Third Party Cover in India when you buy a vehicle.
Benefits : You personally do not benefit from this cover but it covers the liability caused by damage to third parties through your vehicle.
Remember : Premium for Third Party Cover depends upon engine capacity of the vehicle. Higher the engine capacity more is the car insurance premium.

Personal Accident Cover

Need : Road accidents are very common. A Personal Accident Cover financially safeguards you against unforeseen expenses arising from road accidents.
Benefits : It generally provides cover against Accidental Death or Permanent Total Disability arising due to a road accident.
Remember : As per Road Accidents in India 2013 report, India has a very high rate of road accidents at 19.5 per 1,00,000 inhabitants in a year. Hence, it is prudent to avail Personal Accident Cover