15 Popular Car Insurance Terminologies That You Should Know!

Are you a car owner? If yes, then it is essential to have car insurance to protect yourself from any unforeseen events. But let's face it, most of us consider it just another document to carry while driving around. When it comes to making insurance claims or renewing our policies, we need help understanding the basic terminologies. Unfortunately, this lack of knowledge makes it easier for workshops and insurers to profit more from us.

This article covers 15 popular car insurance terminologies that will help you become an informed insurance policyholder.

 

1. Third-Party Cover

Third-party insurance is a type of insurance that covers the liability arising from any damage or injury caused to a third party in an accident. In India, it is mandatory to have at least a third-party cover under the Motor Vehicles Act. It is important to note that the insured person cannot claim any benefits under this type of insurance, as only the affected third party receives compensation.

2. Own Damage Cover

OD cover is an insurance policy that pays for the damages to your vehicle in case of an accident. This means that your insurance company will cover the cost of repairing or replacing damaged parts. To understand the full details of your insurance policy, you should refer to the policy documents provided by your insurer.

3. Comprehensive Car Insurance

A comprehensive policy covers your vehicle damage as well as third-party liability. Depending on your specific insurer and plan, it may also include coverage against theft, disasters, animal damage, etc. It is the most extensive coverage available.

4. Personal Accident Cover

You can opt for this as an add-on to get coverage for injury or death of driver and passengers caused due to an accident. It provides additional protection over and above the regular comprehensive insurance.

5. Insured Declared Value (IDV)

IDV refers to the insured value fixed for your car after depreciation. Though opting for a lower IDV reduces your premium outgo, it is risky. In case of a total loss, you will receive a claim only up to the IDV amount.

6. Compulsory Deductible

Even comprehensive policies require you to bear a minimum, compulsory contribution towards repair costs. This is called deductible and aims to prevent frivolous minor claims. Go through policy terms to know the deductible amount applicable.

7. No Claim Bonus (NCB)

NCB offers a discount on premiums if no claim is made during the policy term. It could be 20% to 50% based on successive claim-free years. Maintaining NCB helps lower insurance costs over the long run.

8. Legal Liability

Legal liability refers to the maximum claim amount the insurer will pay to compensate a third party for any damages or injuries caused in an accident. Limits are specified in the policy.

9. Endorsement

It is important to update your insurance policy with any changes made to your insured vehicle, including the addition of accessories. Please do so to avoid complications when making a claim.

10. Cashless Garage

Cashless garages are workshops tied up with insurers to facilitate direct settlement of bills. You only pay the applicable deductible while the insurer directly pays the balance repair cost to the garage under the cashless settlement.

11. Break in Insurance

If there is a gap or break between two insurance policy periods, it results in a lapse of your coverage. You may have to get a special inspection done before a new policy is issued in such cases.

12. Add-on Cover

Several optional, additional covers can be purchased to expand the scope of a regular car insurance policy. For instance, zero depreciation cover, engine protector, etc., based on specific needs.

13. Depreciation Waiver Cover

With each passing year, your car components undergo depreciation. The insurer pays claims based on depreciated current value. Under this add-on cover, the full new replacement cost is paid.

14. Proof of Loss

Proof of loss is substantiated by supporting documents such as repair bills and invoices, which demonstrate the actual loss suffered as a result of the insured risk. These documents help to justify the amount of the claim being requested from the insurer.

15. Roadside Assistance

Many insurers offer 24x7 roadside assistance services that can arrange for on-spot repairs, towing, medical help, etc., in case your vehicle breaks down or meets with a minor accident when travelling.

Conclusion

With this quick glossary of the 15 key insurance terminologies, you now have better clarity on common terms associated with car insurance. Do go through your policy documents thoroughly and clear any doubts beforehand with your insurer and car insurance partners. This knowledge will be useful in the future if you need to make an insurance claim or handle any other aspect of your policy. Having a complete understanding of one's insurance plan allows us to optimize the coverage benefits.   Consult experts like AIS Windshield Experts if any doubt arises while claiming your policy for your windshield replacement. Stay insured and stay tension-free on the roads.