A Guide on the Important Terms in Motor Insurance
To purchase the right motor insurance and get best benefits from it, you should know a few important terms from the world of insurance policies. While these motor insurance terms might appear confusing at first, they are not as difficult when you understand them. We have listed 8 of the most important ones in this post.
Not only to pick the right car insurance but also to ensure that you get best benefits from it, you need to understand some essential terms related to the policy. While things like IDV, OD, or comprehensive cover might sound very confusing if you are buying a policy for the first time, knowing their meaning is sure to make a world of a difference.
We have created a list of 8 such important terms to help you out.
OD- Own Damage
In case of an accident, the OD covers the damage or loss to the insured vehicle along with 3rd party liability for property damage, injury or death. It is this cover in your vehicle insurance that would pay the expenses incurred in replacing or repairing parts that are damaged in the accident.
IDV- Insured Declared Value
One of the most important vehicle insurance terminologies is IDV. It is the current market price of your car. In case of theft or loss that is beyond repair, the insurer would pay this amount to you to get the car replaced.
3rd party insurance
As per the Motor Vehicles Act, it is mandatory for every car owner to have a 3rd party insurance. This coverage pays for any damage to 3rd party property, vehicle, or person. This cover does not benefit the car owner in any way.
Next in the list of car insurance terminologies is compulsory deductible. This is the amount that the car owner is required to pay whenever he/she files a claim for damage to the car. This is a small part of the overall expenses incurred due to damage or accident and is used for preventing car owners from filing fake or small claims.
Apart fr om the compulsory deductible, you can further increase the amount you would pay from your pocket in case of an accident. This is known as voluntary excess, and it helps in reducing the OD premium.
Apart from a road accident, there are many other ways in which a car can be damaged. This includes an explosion, fire, lightning, earthquake, riot, landslide, terrorist activity, and much more. A comprehensive cover would protect your car from damages due to such events.
NCB- No Claim Bonus
Another very popular car and bike insurance terminologies is NCB. In case if you do not file any claim throughout the period of the insurance, you receive a bonus for the same. Depending on the number of years in which you have not filed a claim, the NCB can be up to 50% of the OD premium.
In most cases, you need to take your vehicle to a garage and get it repaired. In this case, you need to pay the damages from your pocket, and the insurer would reimburse the amount later. However, if the insurer has cashless garage facility, you can get your car repaired by just paying the compulsory deductible and other excesses if any. The rest is directly paid to the garage by the insurer.
These are some of the most important motor insurance terms that every car owner searching for a car insurance should know. Understanding these terms would make it easier for you to compare the available policies and pick one that suits you best.