According to the Motor Vehicles Act of 1988, it is mandatory for all car owners to have a car insurance plan. As car insurance is a must-have, many first-time buyers of the car as well as car insurance plans often get confused about the different terminologies involved in buying any car insurance plan. Many terms used may often seem so complicated even for all those who have ideas about car insurance plans that it becomes important to be aware of the different car insurance terms. Keeping this in mind, we have curated a list of the key car insurance that you should know about
A Glossary Of Key Car Insurance Terms That You Should Know
Some of the common car insurance terms to be aware of are listed below:
- Third-party Cover: This is a type of car insurance policy that covers compensation in case a third-party is injured. As per the Motor Vehicles Act of 1988, a third-party cover is a must-have for all.
- Comprehensive Policy: A comprehensive car insurance policy is one that offers complete coverage against any damage that happens to both your car as well as a third-party.
- No Claim Bonus: No Claim Bonus or NCB is a type of advantage that is provided in case you do not raise any car insurance claims in any particular year. In order to avail of this advantage, you must avoid raising minor claims for scratches and other such cases.
- Insured Declared Value: Insured Declared Value or IDV is the actual market value of your vehicle. It is the actual amount that your respective insurance company pays in case your car is damaged. Basically IDV or Insured Declared Value is calculated on the basis of the difference between manufacturer’s listed price and depreciated value of the vehicle.
- Policyholder: Policyholder refers to the beneficiary individual on whose name the car insurance policy is issued.
- Policy Period: Policy period or tenure refers to the total time during which the car insurance policy is valid.
- Premium: Premium refers to the amount that you need to pay to the insurer to get coverage against all kinds of damages that happen to the car or any third party.
- Cashless Garage: Cashless garage refers to a network of garage where policyholders can get their vehicle repaired without spending any money out of their pocket.
- Deductibles: Deductibles refers to the total amount of money that needs to be borne by the policyholder.
- Add-ons: Add-ons such as zero depreciation cover, key replacement cover, roadside assistance cover, etc are what enhances the benefits of any car insurance plan. Such add-ons can be availed at additional costs.