When it comes to an Insurance Policy, it is the Fine Print what matters. So many terms and conditions to read through, so many technical terms to understand, it demands for a dictionary to refer to. So we thought of putting it together, to begin with, few common terms which you might come across while buying or renewing Motor Insurance, to understand.
Premium for Own Damage
It is the Insurance Premium you will pay to get a cover which is equivalent to the Declared Value of the vehicle. The Own Damage value of the vehicle and the premium will depend on the model and the cubic capacity and even takes in to account where your vehicle is operating.
Insured Declared Value or IDV
This will be the maximum amount you can claim or the highest sum payable by the insurer in case of a complete loss of your vehicle in an accident, theft or natural calamities. It is advisable to quote a right IDV based on the actual market value of the vehicle even though the premium is going up little higher, so that you will not end up in receiving inadequate compensation in case of a total loss or theft.
Third Party Cover
This is a mandatory cover required for any vehicle to ply on the Indian roads and it protects the owner of the vehicle against any financial liability resulting from death, injury or damage to the property of a third party. Since the beneficiary of this policy is a third party other than the vehicle owner and the insurance company, this is referred as Third Party.
Personal Accident Cover
This provides you the benefit of financially safeguarding the owner of the vehicle or driver of the vehicle against unforeseen casualties causing harm such as Accidental Death or Permanent Disability in a road accident. As all the Motor Insurance Policies do not provide this feature by default, it is advisable to verify that this is included as an add on feature while buying a Motor Insurance Plan.
Zero Depreciation Cover
Even though this is not a part of the standard policy, if you opt for it, this can provide you waiver on depreciation on replaced parts , which means you will get a higher claim amount. This is usually applicable for first few claims, but this can considerably increase the premium amount
No Claim Bonus
No Claim Bonus, as the name suggests, is the insurer’s reward to the policyholder for not making a claim in the preceding years. This discount will help you to lower the premium you need to pay while renewing the policy. This is transferable from one insurance company to another, though with some clauses attached on the renewal period.
While these are few of the common terms used in Motor Insurance, it is advisable to go through the fine print and ask as many as questions to clarify every probable doubts you have, before finalising on a plan.