10 Car Insurance Terminologies You Must Know
A car insurance policy provides cover for accidental damage
caused to your car, or injury to the third party or damage to the third party’s
property. A third party car insurance is compulsory in India and that’s why
most of the people don’t’ care about going through the various terminologies of
car insurance. Such negligence can cause you serious problem while making a
claim and can become a bad surprise for you. So it is very necessary to
understand the terminologies of car insurance to get the expected benefits.
So let us understand the 10 most important car insurance terminologies you must
know before buying a car insurance
policy.
1. IDV
Insured’s Declared Value is the sum assured in the case of
car insurance. It is fixed on the manufacturer’s listed selling price at the
commencement of the insurance policy and is later adjusted for depreciation
based on the age of the car. Accessories which are not factory fitted in the
car is not included in the IDV and is calculated separately. The IDV for cars
which are more than 5 years old is decided through mutual understanding between
the insurer and the insured.
2. Zero Depreciation Cover
At the time of claim, a certain percentage of depreciation
is deducted from the IDV of the car. The rate of depreciation is based upon the
age of the car. Such deduction reduces the IDV but if you opt for a Zero
Depreciation Cover then the company waives off the depreciation which allows
you to receive higher claim amount.
3. No Claim Bonus
No claim bonus is the discount given at the time of renewal
of the policy for every claim free year. Such types of discount lowers the premium
which you need to pay at the renewal of your car insurance policy. No Claim
Bonus is expressed in percentage and ranges between 20%-50%. So it is better to avoid making claims for
minor damage and enjoy the benefits of your No Claim Bonus.
4. Cashless Garage
Usually a policyholder gets his car repaired at a service
center and reimburse the expense later, but
under Cashless garage, the insured can get his car repaired at the
network garages of the insurer without paying anything as the expenses for
repair are paid directly by the insurer to the garage.
5. Anti-Theft Deivce
An Anti-Theft device is a device which lowers the risk of
your car being stolen. Installing an anti-theft device to your car not only
protects your car from being stolen, but reduces your premium rates also as the
premium amount for the car is decided upon the risk of damage and theft. But
you should know that the anti-theft device installed in your car should either
conform to the specifications outlined or should be approved by Automotive
Research Association of India.
6. Third Party Cover
In a third party
insurance, the beneficiary is someone else than the two parties involved in
the contract, i.e the insurer and the insured. The policy doesn’t give any
benefit to the insured, but it provides cover for the insured’s legal liability
for death/disability of the third party or loss/damage of property.
A car insurance policy turns into a break in an insurance
policy if you forget to renew the policy on time and allow it to lapse. You can
renew your break in an insurance policy after paying the due premium and going
through the vehicle inspection. If the gap between the lapse and the renewal of
the policy is more than 90 days, then you lose the benefits of No Claim Bonus
which you have earned earlier.
8. Endorsement
Endorsement is the way through which you can make changes in
your policy. The changes can be an addition to your car, like music system,
inclusion of financier’s name, change in ownership. All such changes can be
done through endorsement and updating such information is very necessary to
avail the benefits of your insurance policy.
9. Compulsory deductibles
Compulsory deductibles are the expenses which you are
supposed to bear in case of accidental damage to your car and it prevents the
car owner from making small claims which wipes out the benefit of No Claim
Bonus. The compulsory deductible ranges from Rs.1000-Rs.2000 and is based on
the cubic capacity of the insured car.
10. Personal accident
cover
An accident doesn’t only damages your car but can cause
fatal physical injuries which sometimes results in death and permanent
disability also. Most of the car insurance policies have no any inbuilt
Personal accident cover, but you can add
such cover by paying extra premium.
Car insurance policy offers various benefits and
flexibilities. It is your responsibility to go through the terms and condition
of the policy, so that you will not have to face any difficulty in the future
and can enjoy the benefits of your policy.
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