Major Car Insurance Terms You Should Know

Most of the car-owners in India purchase a car insurance policy just because they have to. There are barely any car-owners around with a real interest in the nitty-gritty's of car insurance policies. But such types of lack of awareness about car insurance can prove to be fatal in the later stages, especially at the time of claim settlement. Many vehicle owners start checking their motor insurance policy terms and conditions only when they need to file a claim and they find many terms beyond their level of considerate. Thus, you should be aware of some of the most common car insurance terms. You can have a look below to know in details about major car insurance terms.

IDV or Insured Declared Value

Insured Declared value is the market value of your insured car. It is the maximum sum you can you can ensure for your car. If you declare the exact IDV of your car to the insured car, at the time of any insurance claim, you will get to total IDV amount in case of total loss of the vehicle or theft.

NCB or No Claim Bonus

NCB means the bonus amount that car insurance policyholders are entitled to get for not making any claim in an entire policy period. Starting from 20% in the very first year of insurance without claim, the amount of NCB keeps escalating for 5 years up to a limit of 50%. Most motor insurance policyholders make the most of the NCB by reducing their premium outgo.

OD or Own Damage Premium

Own Damage Premium or OD Premium of a car insurance plan is the premium that you have to pay to for covering damages to your own vehicle. OD Premium is applicable in case of a comprehensive car insurance policy and liability car insurance policy doesn’t cover losses incurred to the vehicle of the policyholders. However, the amount of Own Damage Premium depends on many factors such as seating capacity, cubic capacity, type of engine and also on the zone where the vehicle is registered.

Third Party Liability Coverage

In car insurance terms, liability coverage is designed to defend the policyholders from their legal liabilities to third parties on the road in case of a road accident. In India, a motor insurance policy with third-party coverage is a legal obligation. A car insurance plan with third party liability coverage only pays out financial compensation in case of death of the third party, accidental physical injuries and property damage.

Personal Accident Coverage

Personal accident coverage is also a part of car insurance plans. In this type of coverage, the owner-driver of the insured vehicle remains financially covered in case of physical disablement and death. The personal accident coverage pays out for financial compensation up to a limit in case if unfortunate death and permanent or temporary and total or partial disablement. This coverage can be extended to the paid driver and passengers of the insured vehicle for an additional premium on car insurance.