Today, it is very easy to compare motor vehicle insurance online and purchase the most suitable one. Motor insurance documents are exhaustive and you may not be familiar with the insurance jargon that is being used. This can be especially challenging when filing a claim.
There are certain terms which are commonly used in policy documents that you need to understand, before you make claims against your policy. Here are some of them:
Third party car insurance vs. comprehensive car insurance
Third party car insurance is mandatory in India and covers you against any damage or injury that you may cause to a third party due to an accident. This does not offer coverage to damage caused to your vehicle due to the accident.
Comprehensive coverage has a much wider scope and covers your car against damage caused due to accidents and a variety of other causes such as fire, theft, explosion, natural calamities, malicious act, terrorist activity, and so on. Comprehensive cover offers better protection to your car as compared to third party insurance.
Insured declared value (IDV)
Another common term that you will come across while looking for motor insurance online is the insured declared value (IDV). IDV is the highest sum that is payable under a motor insurance policy. This is the maximum amount that you can claim in case of total loss of your vehicle.
Own damage premium (ODP)
Own damage premium (ODP) forms a significant part of your total insurance premium. It is the part of the premium that you pay in order to insure your vehicle against events which are not in your control. Such events would include natural disasters and man-made calamities.
The ODP is determined by factors such as the model of the vehicle, cubic capacity, geographical zone in which it is located, and so on.
Zero depreciation cover
When you make motor vehicle insurance claims, depreciation is normally deducted on replaced parts. If you choose zero depreciation cover, the insurance company waives off the depreciation and you get a higher claim amount. You need to pay a higher premium for such coverage.
No claim bonus (NCB)
No claim bonus (NCB) refers to the discount that you become eligible for, in case you have not made a claim in the previous year. This can significantly reduce your premium amount. NCB amount can be substantial, starting with a 20% discount in the second year, up to 50% in the sixth year.
NCB can be transferred from one insurance company to another if the renewal is made within 90 days of the expiry of the previous policy.
Personal accident cover
Considering the high incidence of road accidents in India, it is important to ensure that your motor insurance policy includes personal accident cover as well. It is a safeguard against unexpected eventualities causing bodily harm such as accidental death or disability. In most policies, personal accident cover comes as a rider upon payment of an additional amount.
There are various aggregator websites where you can compare car insurance online and choose the one that best suits your needs.