Most of us are unaware of the various terms that are used in car insurances. There are a large number of important terms that are used and remembering and understanding them is difficult work. To make this task easy, given below are some important terminology that will help while reading through a policy or making a claim.
Insured Declared Value (IDV)
To put it very simply, it refers to the current market value of your vehicle. This value is used to determine the highest amount of money the insurance company is liable to pay if there is any problem with your car. Meaning that if your car gets stolen, or is damaged very badly then you can claim for your insurance IDV ensures the maximum value that you can get. When you are buying your car insurance, ensure that you are quoting the exact cost of your car and not something lower than that. You may have to pay less premium but your returns will go down as well.
Personal Accident Cover
While buying your car insurance, you should be careful whether your policy covers this clause or not. Most policies do not cover this particular clause. In such cases, you may have to pay a little extra to ensure that this term is covered. Now, what is the meaning of this term? When in an accident, it is not just your car that gets damaged, but in many cases you may be badly hurt as well. An accident can sometimes cause death or permanent disability. In such a case you can claim this insurance. This is an insurance clause for the individual along with the car.
Third Party Cover
Where the insurance work for your car is concerned, you are referred to as the first party; your insurance company is the second party. Third party refers to any person who is adversely affected by your car’s accident. The damage caused can be death, any physical injury, or damage of property. In such a case it is your liability to compensate the third party of the financial loss. Third party liability clause covers this aspect of the insurance claim. You are not directly benefitted by this policy but it helps you pay for any damage caused to a third party and saves you from any legal glitch. In India third party cover is a compulsory part of insurance policy.
No Claim Bonus (NCB)
This term is associated with renewal of your insurance policy. This is a discount that is given to you when you are renewing your insurance policy. It means that you have not claimed your policy and now wish to renew it. If you are opting for a different insurance company then your NCB is generally transferred to that company, provided you made the renewal within 90 days of the expiry of the previous one. The NCB is not granted to the vehicle but to the insured. If you have sold your car to someone then you can retain your NCB to your new car provided you apply for reserving letter from your current insurer about the NCB. Reserving letter is valid for 3 years, i.e. you can transfer your NCB to new car within 3 years from the date of issue of reserving letter.