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Are you planning to buy or renew your motor insurance policy online? But are the terminology and jargons you read deterring you? 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 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.
Keep reading to learn more about motor insurance and buying insurance online.
