Here are a few of the most common terminologies used in car insurance that every person should be familiar with:
Third-party liability cover - A third-party liability cover is a car insurance plan that covers third-party liabilities that the policyholder incurs at the time of a mishap.
Own Damage (OD) cover - An own damage cover is a part of the car insurance plan that covers the liabilities towards own vehicle damage due to accidents, fire, natural calamities, etc.
Legal liability - In case of an accident involving your insured vehicle where a third-party suffers damages, the owner of the insured vehicle is liable to pay for those damages.
ARAI - ARAI stands for Automotive Research Association of India, a government agency where testing, research and development, homologation, etc. of the vehicle regulations take place.
IRDAI - IRDAI stands for Insurance Regulatory and Development Authority of India, a government agency that promotes and regulates the insurance industry in India.
Anti-theft device - An anti-theft device like GPS, car alarm, etc. when installed in a car lowers the risk of the car getting stolen.
IDV - IDV stands for Insured Declared Value is the market value of the car minus the depreciation at the time of purchasing or renewing a car insurance policy. IDV determines the sumk to be insured under a policy.
Voluntary deductible - A voluntary deductible is a part of the insured sum that the policyholder volunteers to pay at the time of insurance claim settlement.
Compulsory deductible - A compulsory deductible is a fixed part of the insured sum that is mandatory of the policyholder to pay at the time of a claim settlement.
No Claim Bonus (NCB) - A No Claim Bonus is a discount on the car insurance premium awarded to the insured by the insurer for every claim free year. The maximum percentage of discount one can avail is 50% at the end of 5 years.
Depreciation - Depreciation is the loss in the value of your car with respect to its age.
Comprehensive policy - A comprehensive car insurance policy is an agreement between the insurer and the policyholder where the insurer promises to protect the policyholder against any liabilities that occur as a result of mishap in exchange for a fixed premium. Comprehensive car insurance plan covers third-party liabilities as well as own damage liabilities at the time of mishap.
Inclusions of Comprehensive Insurance Policy:
Own damage liabilities
Loss/damage due to theft of the vehicle
Loss/damage due to natural calamities
loss/damage due to man-made calamities
Exclusions of Comprehensive Insurance Policy:
Loss/damage in case your policy has expired
Loss/damage due to nuclear perils and wars
Loss/damage in case the driver was under the influence of intoxicants
Loss/damage when the car was being used for illegal activities
Cashless claim - Cashless claim is a claim settlement process where the insured, post a mishap, can get his or her car fixed at the nearest network garage where the insurer covers the complete cost of the repairs made.
Network garages - Network garages or a cashless garages are the workshops authorised by an insurer for cashless claim settlement.
Endorsement - An endorsement is a change/update made to one's car insurance policy. There are two kinds of endorsement, premium bearing endorsement and non-premium bearing endorsement.
Break in insurance - A break in insurance is a lapse in one's car insurance when one forgets to renew the insurance policy in time within the allotted number of days for policy renewal.
Personal Accident Cover - Personal accident cover is part of the comprehensive cover that financially protects the policyholder/car owner from injuries or any medical emergencies as a result of a mishap
Riders - Riders, also known as add-on covers are insurance covers that one can opt for in addition to their base insurance policy to extend the car insurance coverage.
Zero depreciation cover - A zero depreciation cover is an add-on cover that when added to the base policy will allow the policyholder to get the full insured amount at the time of claim settlement without reducing the amount for depreciated car parts that needs to be replaced or repaired post a mishap.
Roadside assistance cover - A roadside assistance cover is an add-on cover offered by the insurer where facilities or emergency services such as towing, arranging for alternate transportation, arranging accommodation, etc. are provided on request, depending on the situation.
Engine protect cover - Engine protect cover is an add-on cover that when added to one's base policy (comprehensive car insurance) covers the engine damages as well post a mishap.
NCB protect cover - An NCB protect cover is an add-on cover that when added to one’s base insurance policy protects the insured from losing his/her accumulated NCBs at the time of a claim settlement.
Return to invoice (RTI) cover - Return to invoice cover is an add-on cover that when added to one’s base insurance policy protects the original value of the car in case of theft. In such case, under this rider, the insurer will have to pay the policyholder the original price of the car which is inclusive of the road tax and registration charges.
Salvage - Salvage is the total value of the wreck when the vehicle involved in a mishap is damaged.
Total Loss - A vehicle is considered as total loss if the vehicle involved in the mishap has been damaged beyond repair and restoring it to its initial state is not possible.
Cover Note - A cover note is a temporary document provided by the insurer to the policyholder until the insurer is able to issue the original car insurance policy document to the insured.
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