Every industry uses jargon that relates to specific aspects. These simplify the terms for those working in it and help maintain uniformity. But they become incomprehensible for an outsider. The same applies to Car Insurance. If you are a first-time buyer, you come across various terms during the buying process. These leave you confused and affect your experience.
Even if they seem tricky, they form an essential part of the policy. They outline the terms and benefits. Hence, you must understand them to buy the right insurance plan. Besides, they are not as complex once you decode them. Learning about the basic terms is enough to get started in the buying journey.
Here are some of the essential Car Insurance terminologies you should know about:
Own-damage
This protects your vehicle. It covers its damages by accidents, human-made disasters, natural calamities, fire, theft, etc. The insurers pay for such losses by either replacing or repairing the affected parts. An inspection gets conducted for the same after you raise the claim. It is mainly included when you buy Comprehensive Car Insurance online. Hence, if you want to protect your four-wheeler, choose this plan type.
Third-party liability
This comes with limited coverage that you need to have to drive on Indian roads legally. It only covers your liability towards others. This pays for the damage your vehicle causes to a third-party. It includes coverage for injuries, legal implications, death, and property damage. It is available both as a standalone plan and as inclusion in Comprehensive Policy. You get a maximum of Rs.7.5 lakh compensation based on the sum insured.
Insured Declared Value
This is the prime factor deciding the compensation you can expect in case of irreparable loss. It is the actual market value of your automobile minus the depreciation. It is agreed upon between you and the policy provider when buying the Car Insurance Policy. Make sure to finalise the same with due diligence as it is the maximum insured sum you get. If you upgrade or make any modifications to the four-wheeler, they get insured separately.
Claim
This is when the insurance gets used. It refers to intimating the Car Policy provider regarding the loss or damage. After which, an investigation takes place to inspect the incident. This gets followed by approval if it meets the required conditions and the settlement process begins. You either get paid from the claim amount for repairs or replacement, depending on the severity.
No claim bonus
It is a reward offered when you complete the policy period without raising a claim. It gets utilised during the Four-Wheeler Insurance renewal as you discounton the premium amount. It starts with 10% and extends up to 50% when you have five consecutive claim-free years. You must renew your policy and prevent it from lapsing to avail of the same.
Deductible
This amount you pay as a part of the claim comes in two types – compulsory and voluntary deductible. The former is a small portion you must bear in online Car Insurance claim settlement. It is a step taken by the insurer to reduce the number of small and unnecessary claims. It is usually a manageable amount. The latter is not a compulsion but a voluntary excess you pay on your own. It helps reduce the premium amount considerably.