Car Insurance Glossary
Before buying your car, you do your research to learn all about its features and how they affect your car. Similarly, before you buy your car insurance policy, it is best if you learn about the car insurance jargon. Without understanding what your car insurance policy comprises and how it can benefit you as well as your car, you will not be able to make the right choice.
A car insurance policy is about more than just offering you financial cover in case your car faces any damage through an accident. To understand the nitty-gritty of it, you must at least be aware of the most common car insurance terminologies that you need to know about. But before we dive into it, let’s learn about the types of car insurance that you can get.
Third-party car insurance is the type of car insurance that provides cover to the third-party in case of any damage to them, their property, or their car. This motor insurance is mandatory by law. You must at least have third-party car insurance, if not any other type.
Own damage cover or standalone car insurance policy offers cover to your vehicle in case of an accident, natural disasters, civil disobedience, etc. This type of car insurance also provides cover for you in case of injuries or death.
Comprehensive car insurance is an extensive car insurance policy that is a combination of both third-party and own damage cover. This type of car insurance provides protection for your car in case of accidents, theft, ignition, total damage, etc.
Along with the types of car insurance policies, here are other common terminologies that you must be aware of:
Insured Declared Value (IDV) is the maximum amount that your insurer will cover in case your car faces total loss due to damage or theft. This amount is decided before you buy the policy and depends on the market value of your car at the time of purchasing the insurance. You can calculate the IDV by deducting the depreciation from the manufacturer’s listed selling price.
Deductibles are the amount that you pay from your pocket when you file a claim. The rest of the amount of the claim is paid by your insurer. There are two types of deductibles in car insurance.
This amount is to be paid by mandate when you file the claim and cannot be increased or decreased. The amount is decided by Insurance Regulatory and Development Authority. Compulsory deductibles do not affect your monthly premium amount.
This amount is mutually decided by you and your insurer. You can choose to either increase or decrease this amount, and it will indirectly affect your monthly premium amount.
Have you ever wondered that if you never file a claim, you might be paying all the premium for nothing? Well, let’s bust that myth for you. For every claim-free year, you get rewarded in terms of either a discount on your premium amount or an increase in your coverage amount. This is known as the No Claim Bonus. To get the benefit of this reward, make sure you file your policy renewal on time. If you fail to do so, you may lose the opportunity to get your No Claim Bonus.
In situations like relocation, change in the name of the nominee, addition of riders, etc, you will need to approach your insurer to make changes. This is known as making endorsements to your car insurance policy. Every car insurer gives you the opportunity to make endorsements to your vehicle insurance policy. However, there’s a limit to how many endorsements you can make each year. You must check for the same with your insurance company.
In the case of cashless car insurance, when you file a claim, your insurer pays upfront to repair the damages. You do not have to pay anything apart from the deductibles and other mandatory charges. All you have to do is inform your insurer about the car damage as soon as possible and take your car to the enlisted garage on your cashless garage network.
In the case of reimbursement car insurance, when your car faces any damage, you have to bear all the expenses and later file a claim to get the money reimbursed from your insurer. This can be a longer process compared to cashless car insurance and requires you to keep all your documents in check.
When you buy your four wheeler insurance, you can keep these terminologies in mind to customize your own car insurance plan. Besides, you should also compare car insurance online to learn about your options and the different deals offered by various car insurance companies online. There’s no need to be intimidated by the car insurance jargon. Rather, you should learn about them and use them to your advantage.