It is very important to avail motor insurance for your vehicle. But unfortunately, not everyone is aware of the various motor insurance terms. As an owner of a vehicle, you should know each and every motor insurance term. If you are not familiar with the terms used in a motor insurance plan, there are chances of you getting cheated. Here are five motor insurance terms you must know.
One of the most commonly used terms in Motor Insurance is Insured Declared Value(IDV). Insured Declared Value shows the current market value of your vehicle. It is the maximum amount you can claim in case of total damage to your vehicle. For example, if someone has stolen your vehicle or it is damaged beyond repair.
Insured Declared Value = (Selling price - depreciation) + (Accessories that are not included in listed selling price - depreciation) and excludes registration and insurance costs.
Some people opt for lower motor insurance to save premiums. But if something happens to your car, you will end up getting inadequate compensation.
When you make an insurance claim, normal motor insurance plans deduct depreciation on replaced parts. In case you opt for a zero depreciation cover, your insurer will not deduct depreciation on replaced parts. When you avail motor insurance you can opt for such a rider by paying a slightly higher premium. This cover is applicable only to the first few claims you make.
You will be eligible for a no claim bonus, if you have not made any claims in the previous year. This is a reward given to you by your insurer for handling your car carefully. If you are eligible for no claim bonus, you will have to pay a lower premium when renewing your motor insurance plan. So, it is advisable not to make claims for minor damages. To avail the no claim bonus, you should renew your motor insurance plan, within 90 days of the expiry of the old motor insurance plan.
Another most commonly used word in motor insurance is third party liability cover. In case you meet with an accident which leads to the death, injury, damage to property of a third party, your insurance company will settle the claim. This cover is called third-party liability because the beneficiary is someone else other than the insurance company and vehicle owner. In India, it is a must to have a third party liability cover.
Some motor insurance plans include personal accident cover which safeguards you against unforeseen events/accidents, which cause you bodily harm such as total disability, permanent total disability, permanent partial disability in the event of an accident. In case of accidental death, your family will be compensated. As not every motor insurance policy includes personal accident cover, it is advisable to opt for the insurance plan which offers personal accident cover.