Most of the time, people do not know how to purchase the right motor insurance policy as they’re not aware of the basic terms. They buy the insurance plan for the sake of it and later regret when the policy does not provide enough coverage. These same terms might look confusing to you, but they are not as difficult once you understand them.
Listed below are 8 such important terms used in the world of insurance policies:
- Insured Declared Value (IDV)
Insured Declared Value (IDV) is one of the most important vehicle insurance terms. It is basically the current market value of your vehicle. If your vehicle has been damaged completely and is beyond repairs or has been stolen, the payment will be done by your insurer.
- Compulsory Deductibles
Compulsory Deductibles is the amount that you are required to pay while filing a claim in case any damage is caused to your vehicle. This is a small amount of the expense incurred overall as a result of damage or accident.
- Comprehensive Insurance
A vehicle can be damaged in many ways and not just road accidents. A sudden occurrence of flood or earthquake can cause some unrepairable damages. However, you need not worry if you have a comprehensive motor insurance policy, as it would protect your vehicle from such events.
- Cashless repairs
For those who are not aware of the term network garage, end up spending a lot of money in the repairs unnecessarily. However, if you take your vehicle to one of the garages in the list of your insurer’s network, the repairs will be taken care of by the insurance provider. All you will need to do is pay the compulsory deductible, the remaining amount will be directly paid by the insurer.
- Own Damage Cover
If you happen to meet an accident, the own damage cover will protect the damages or losses caused to your vehicle. Third-party liability for property damage, injury, or death will also be taken care of under this cover.
- No Claim Bonus (NCB)
No Claim Bonus is another important term used under motor insurance. If you do not file a single claim in your entire policy term, you will receive a concession on the premium at the time of motor insurance renewal. This same NCB can increase every claim-free year and reach up to 50%.
- Third-Party Liability
According to the law, it is mandatory for every vehicle owner to at least have a third-party insurance cover. Any damages caused to the property of a third-party or injuries caused to a person are taken care of by this cover.
- Voluntary Deductible
Out of the two types of deductibles available, the voluntary one is the amount you agree to pay from your pocket in case there is an accident. This helps in reducing the own damage premium.
The above-mentioned are a few important motor insurance terms that every vehicle owner must be aware of. You must understand the terms as it would also make it easy for you to compare the policies available and help you choose the one that suits your requirements.
There are a variety of insurance policies available in the market, you can opt for one as per your use. For instance, if you need a vehicle for business purposes, choose commercial vehicle insurance. Analyze your needs, fix your budget, and make an informed decision.