6 Motor Insurance terms we must know before claim
A list of important vehicle insurance terms that will definitely come across when buying or renewing motor insurance.
- Insured Declared Value (IDV)
One of the most commonly used insurance claim terms, IDV is the current market value of the vehicle. IDV refers to the highest sum payable by the insurer for a vehicle insurance policy. It is thus the maximum amount which can claim in case of total loss of the vehicle, for instance if it gets stolen or damaged beyond repair.
- Own Damage Premium
This is the premium that pay to avail an insurance cover equal to the IDV, and forms a major part of your total motor insurance premium.
ODP insures the vehicles against losses caused by events outside of your control. This includes natural disasters like earthquakes and tornadoes, as well as man-made calamities like fires and explosions.
- Zero Depreciation Cover
When we make motor insurance claims, standard insurance policies deduct depreciation on replaced parts. However, if we opt for a Zero Depreciation cover, insurance companies waive off depreciation on such replaced parts, which means that we get a higher claim amount.
- No Claim Bonus (NCB)
One of the most commonly used vehicle insurance terms, this is essentially the discount to become eligible for when we have not made a claim in the previous year- kind of like a reward for prudent use of our vehicle. This discount considerably lowers the insurance premium we need to pay when our’s renewing the policy.
Since the NCB discount amount can be quite large- starting at 20% for the 2nd year and up to 50% for the 6th year, it’s worth refraining from registering a claim for minor damages, and instead holding out for the NCB.
- Third Party Cover
Another popular insurance claim term that is used is Third Party cover. This cover protects the vehicle owner against any financial liability as a result of death, physical injury or damage to the property of a third party. The term “third party” is used because the beneficiary of the policy is someone other than the two parties involved in the contract i.e. the vehicle owner and the insurance company. A victim can thus file a third party cover claim against the owner of the vehicle, and the latter’s insurer will pay for this claim on their behalf.
6. Personal Accident Cover
Beyond just the vehicle, Personal Accident Cover financially safeguards us against unforeseen events causing bodily harm, such as Accidental Death or Permanent Total Disability arising due to a road accident.
India does hold the dubious distinction of most number of road accidents annually.