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 an agreement between the policyholder and the insurer where the insurer promises to cover the third-party liabilities the policyholder incurs due to a mishap, in exchange for a premium.
Own Damage (OD) cover - An own damage cover is a prominent part of the comprehensive car insurance plan where the insurer covers the liabilities towards own vehicle damages that the policyholder incurs due to a mishap.
Legal liability - Legal liability also known as third-party liability is when an accident involving your insured vehicle takes place where the third-party involved in the accident has undergone certain damages or losses for which you are liable to pay for.
ARAI - ARAI is an acronym for Automotive Research Association of India. It is a government agency in India where testing, research, development, homologation, etc. of the vehicle regulations take place. Insurers offer discount on insurance premiums for those policyholders who have installed ARAI approved security devices in the car.
IRDAI - IRDAI is an acronym for Insurance Regulatory and Development Authority of India. It is an agency of the Indian government that is solely responsible for the promotion and regulation of the Indian insurance industry.
Anti-theft device - An anti-theft device is a security device that helps you keep a track on your vehicle and protects it from theft. Anti-theft devices to be installed in your car should be ARAI approved. Anti-theft devices include GPS trackers, car alarms, car locks, etc.
IDV - IDV is an acronym for Insured Declared Value. IDV is the current market value of the car minus the car’s depreciation at the time of insurance policy purchase or insurance policy renewal. IDV determines the sumk to be insured under a policy.
Voluntary deductible - A voluntary deductible/excess is a part of the insured amount that you volunteer to pay at the time of your claim settlement. You are eligible for a discount on your car insurance premium if you opt to pay a high voluntary deductible. The amount for the voluntary deductible is fixed by you.
Compulsory deductible - A compulsory deductible/excess is a part of the insured amount that is mandatory of you to pay at the time of claim settlement as per the set motor insurance laws.
No Claim Bonus (NCB) - A No Claim Bonus is a discount offered by the insurer to the policyholder on the insurance premium. A policyholder is eligible for a 20% discount in the first year and the discount can go upto a maximum of 50% in the fifth year.
Depreciation - Depreciation in car insurance is the loss in the vehicle’s market value as it ages.
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 where the policyholder can get his/her car fixed at any of the insurer authorised cashless garage or network garage without having to pay for the repairs. Instead, the insurer will be pay the garage for the repairs made, minus the depreciation and deductible that the policyholder has to pay for.
Reimbursement Claim - Reimbursement claim is where the policyholder can get his/her car fixed at any garage post a mishap, but unlike a cashless claim, in this case the policyholder will have to pay the garage for the repairs made to the vehicle. The policyholder can later get the amount reimbursed from the insurer after submitting relevant invoice and receipt.
Network garages - Network garage, also known as a cashless garage is a workshop authorised by the insurer where the policyholder can get his/her car repaired without having to pay the workshop for the repairs.
Endorsement -An endorsement is any change/alteration made to one’s insurance policy. Endorsements are of two kinds, premium bearing endorsement and non-premium endorsement. You have to submit a letter of endorsement to the insurer, requesting them to make the enlisted changes to his/her car insurance policy.
Break in insurance - When the policyholder fails to renew his/her motor insurance policy within the allotted time, a break in insurance occurs. After there is a break in insurance, you cannot renew your policy, instead you will have to purchase a new policy and have our car inspected again.
Personal Accident Cover -Personal accident cover is a part of the comprehensive insurance coverage that protects the policyholder from any liabilities towards damage of own vehicle or injuries to self.
Riders - Riders are add-on covers that you can add to your base motor insurance cover to enhance the insurance coverage offered by the base policy. Riders are mostly offered with the comprehensive car insurance policy. By adding the riders to your base policy you can include some of the policy exclusions to inclusions.
Zero depreciation cover - A zero depreciation cover is also known as bumper to bumper cover and is offered as one of the riders with comprehensive car insurance policy. A zero depreciation cover is one of the popular add-on covers among luxury car owners. This cover prevents the loss in the value of the car parts due to depreciation such that the policyholder receives the complete insured amount without deducting the amount of depreciation on the car parts that have to be repaired or replaced.
Roadside assistance cover - A roadside assistance cover is usually offered by the insurer as an add-on cover with the comprehensive car insurance policy or a built-in policy feature. A roadside assistance cover offers round-the-clock emergency services such as towing, arranging for alternate transportation, arranging accommodation, etc. to the policyholder on request, based on the scenario..
Engine protect cover - Engine protect cover is offered by the insurer as one of the add-on covers with the comprehensive car insurance policy. This rider when added to one's base policy will cover the expenses for the repair of vehicle's engine, in case there is any issue with the engine as a result of mishap.
NCB protect cover -An NCB protect cover is offered as an add-on cover by the insurers in India. By availing the NCB protect cover, you can prevent the loss of your accumulated NCBs when you raise a claim at any point during the policy period.
Return to invoice (RTI) cover - Return to invoice cover is offered as an add-on cover by the insurers in India. By adding this rider to your base comprehensive insurance policy, you can protect the original cost of your car in case of burglary. In case your car does get stolen, the insurer is liable to pay you the complete cost of your car which includes the road tax and registration charges as well as recorded in the original invoice.
Salvage - The total value of wreck when the insured car gets damaged as a result of a mishap.
Total Loss - A vehicle that has been damaged beyond repair as a result of a mishap is considered to be a total loss. Here, the restoration of the damaged vehicle is not at all possible.
Cover Note - A cover note is provided by the insurer to the policyholder in the place of the insurance certificate. The policyholder has to carry the cover note in his/her car until the insurer issues him/her the insurance certificate.
Policyholder - Policyholder is the person who has purchased or renewed the insurance policy where in the insurance policy is in his name.
Premium - Premium in car insurance is the amount you pay for the car insurance policy you purchase or renew.
Collision Coverage - This plan covers the liabilities towards damage to your vehicle regardless of who caused the mishap. The insurer in this case will pay the complete amount minus the deductibles.
Declarations Page - Declaration page is a page in your insurance policy document that contains relevant details pertaining to your policy such as the name and address of the insurer, policy period, model and make of the vehicle, the amount of the insurance premium and the amount of insurance coverage.
Deductible - Deductible is a part of the insured amount that you will have to pay on your own at the time of claim settlement.
Premium Calculator - Premium calculator is an inbuilt tool found on the websites of insurers and third-party insurance websites. Premium calculator calculates your insurance premium based on the information you have provided and quotes the estimate onscreen.
Renewal - Renewal in car insurance is when you pay insurance premium to keep the insurance policy running without letting it expire.
Actual Cash Value - Actual Cash Value in car insurance is the current market value of the car minus its depreciation.
Antique automobile - A passenger automobile that is over 25 years old but has been preserved, maintained and restored by antique automobile collectors.
Accident - An unfortunate mishap that may lead to personal injury or property damage.
Agreed Value - The value of the written-off agreed by both you and the insurer for the purpose of compensation.
Breakdown Assistance - It is a service offered by the insurers where you will be offered one hour of roadside assistance along with towing facility to the nearest garage in case your vehicle cannot be repaired on spot.
Car Hire Cover - This plan is offered as a feature or add-on cover with the insurance policy. Under this cover you will be offered discount on car rental in case your vehicle has been damaged post a mishap.
Cancelling the policy - Cancelling the policy is discontinuing the benefits and protection offered by a car insurance policy. You cancel the insurance policy anytime after informing the insurer.
Certificate of Insurance - Also known as insurance certificate, it is a legal document issued by the insurer to you after you purchase or renew a car insurance policy. The insurance certificate should be carried by you every time you drive and contains relevant information pertaining to your car insurance.
Contract - It is a legal agreement between two or more parties where one party promises to offer a certain service in exchange for a certain consideration.
Coverage - Coverage in car insurance is the benefits and protection offered by the policy.
Claim - A request made to the insurer by the policyholder to cover the liabilities incurred at the time of mishap. Claims are of two kinds, cashless claim and reimbursement claim.
Depreciation - In car insurance depreciation is loss in the value of the car as it ages.
Fire and Theft (Cover) - This cover protects the policyholder from liabilities towards vehicle damage due to an unfortunate fire incident or loss due to theft of the vehicle.
Named Driver - The person whom the policyholder has permitted to drive the car and is covered under the same insurance policy.
Named non-owner coverage/policy (NNO) - This policy covers someone who does not own any vehicle but qualifies for a car insurance policy.
No Claims Discount - No Claims discount is also known as No Claim Bonus Discount where the policyholder is offered discount on his insurance premium for every claim-free year.
Nominated (Occasional) Drivers - Drivers who occasionally drive the insured vehicle other than the policyholder. The names of these drivers will be added to the same car insurance policy.
Period of insurance - The time period during which the car insurance policy stays operational, usually policy period for car insurance is 1 year.
Private Car - Cars that are used to fulfill private purposes alone.
Policy Comparison Tool - This is an in-built tool present on the websites of insurers or third-party insurance websites that lets you compare two or more motor insurance policies on the same screen. This tool will help you decide on the best car insurance policy.
Replacement Cost - The cost of replacing damaged car parts/car with new ones.
Replacement Vehicle - A feature offered with car insurance where you will be compensated for a replacement vehicle you will use while your own car is getting repaired.
Subrogation - Subrogation is a scenario where the insurer after settling the claim, can bring a liability suit to the third-party who caused the mishap without getting the policyholder involved. This is done in order to retrieve the amount they lost in the claim settlement.
Vehicle Identification Number (VIN) - VIN is 17-character long and unique to each vehicle. VIN can be found on the vehicle’s dashboard or on driver’s side door jamp.
Vehicle Write-Off - A vehicle is written off by the insurer if the vehicle has been damaged beyond repair in a mishap or repairing the same does not seem to be a feasible idea.
Windscreen Damage - This is offered as an add-on cover by a few of the insurers. This covers any liabilities towards damage of your car’s windscreen or any other windows, except for the sunroof.
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