The 10 Most Important Car Insurance Terms
According to India’s automotive rules, every automobile owner must have a valid car insurance coverage.
However, you need to be familiar with a few key phrases in auto insurance before buying a motor
coverage for your four-wheeler.
Learn These 10 Crucial Car Insurance Terms
In order to get an appropriate motor insurance coverage for your four-wheeler, it is crucial to understand
the numerous terms used in four-wheeler insurance. Before purchasing a policy, make sure you
understand these 10 key phrases related to auto insurance:
1.Coverage for Third-Party Liability
Every automobile owner in India is required to carry third-party liability insurance in order to lawfully drive
on Indian roadways. When a traffic accident involving the insured vehicle occurs, this four-wheeler
insurance coverage financially guards against liabilities coming out of third parties. A third-party liability
policy offers limitless coverage for third-party wrongful death and bodily harm. Additionally, it covers
third-party property damage up to a maximum of Rs. 7.5 lakh. In India, you must at the very least have a
third-party auto insurance coverage.
2.Complete Protection
The second sort of coverage available for auto insurance is comprehensive coverage. Although not
required, this insurance is recommended since it gives the automobile owner broad protection. A
comprehensive auto insurance coverage protects the insured vehicle from both internal and external
harm. It pays out benefits to the policyholder if the covered vehicle suffers damage as a result of third-
party liabilities, theft, fire, natural catastrophes, or other calamities. The comprehensive automobile policy
may be the best option for you if you want broader auto coverage.
3.Cost of Auto Insurance
The set cost of an auto insurance policy that you must purchase is called a premium. In other words, it is
the cost of the auto insurance policy that you purchase to protect your vehicle against any unforeseen
accidents that may occur while you are driving. Before acquiring a coverage for your four-wheeler, you
may compare the motor insurance prices given by several insurance providers on websites like
Policybazaar.com.
4.The insured declared value is
The IDV, often known as the insured declared value, is one of the most crucial auto insurance words. If the
covered vehicle is a total loss or a victim of theft, this is the most you may expect to get from your
insurance company. Since it is the highest amount of compensation given out during claim settlement,
the Insured Declared Value is crucial. The amount of depreciation that the insured vehicle has endured up
until the time of claim settlement is subtracted from its overall value to determine the IDV.
Therefore, while buying a four-wheeler insurance coverage, you must pay attention to the IDV of the
automobile. Make sure it corresponds to your car’s current market value.
5.deductibles
In the case of auto insurance, the deductible is the portion of the claim settlement cost that you are
personally responsible for paying. The insurance provider pays the remaining claim sum. It is categorized
as both an optional and required deductible. The deductible that you will be compelled to pay every time
a claim is filed is known as the obligatory deductible. The cost of mandatory deductibles is determined
by an automobile’s engine’s cubic capacity.
The portion of the claim amount that you voluntarily decide to pay at the time of claim settlement is
known as a voluntary deductible, on the other hand. Additionally, you can decide not to pay voluntary
deductibles by selecting a vehicle insurance coverage with no voluntary deductibles. However, choosing a
greater optional deductible will lower your auto insurance policy’s rate.
6.Unclaimed Bonus
Another crucial phrase related to auto insurance is a no-claims bonus. You earn a reduction on your
renewal payment for not filing a claim throughout the term of your insurance. If you have gone up to 5
consecutive policy years without filing a claim, you may be eligible for an NCB discount of 20% to 50%.
Additionally, if you renew your four-wheeler insurance coverage with another insurance provider, an NCB
may also be transferred.
7.Garages without cash
The approved network garage of the insurance provider from which you have acquired your auto
insurance is a cashless garage. You may get your automobile fixed in a cashless garage without having to
pay for the repairs out of pocket. Once the repairs are finished, the insurance provider settles your claim
by paying the repair bill straight to the cashless garage. Cashless garages are advantageous since they
are legitimate and less complicated when claiming for repairs.
8.Policy Supporters
Any modifications or adjustments made to an automobile policy document after it has been issued are
referred to as endorsements. Endorsements come in both premium and non-premium bearing varieties.
A premium-bearing endorsement is any recommendation that raises the premium amount. These include
of the installation of a CNG/LPG kit, pricing changes, the inclusion of new accessories, changes to the
vehicle itself, etc. A non-premium-bearing endorsement has no direct impact on the premium. These
include modifications to the vehicle’s registration information, policyholder’s address, nominee
information, etc.
9.Extra Covers
In order to increase the coverage of your four-wheeler insurance policy, you may purchase add-on covers,
which are extra covers. By paying an additional premium over your current four-wheeler insurance
payment, you may obtain an add-on policy from the same insurance provider. Zero depreciation cover,
engine protect cover, NCB retention protection, personal possessions cover, roadside assistance cover,
etc. are a few add-on policies that practically all motor insurers provide.
Only with a comprehensive or own damages insurance is it possible to tack on additional coverage by
purchasing an add-on cover. However, be careful not to add needless extras to your order since this will
just raise the cost of your premium.
10.Coverage for Personal Accidents
In order to financially safeguard the owner/driver of the covered automobile, an insurance provider must
give a personal accident cover. It protects the owner/driver against unintentional harm, disabling
conditions, or death. Only the owner/driver is required to have it; however, additional coverage for other
passengers may be obtained by paying an additional fee. The IRDAI has determined the minimum level of
personal accident coverage required under a comprehensive auto policy at Rs. 15 lakh.
