How Well Do You Know These Motor Insurance Terms?

It’s a fact that a motor insurance is mandatory in India. It could be in the form of the car insurance, auto insurance and more. If you drive a vehicle – be it a car, bike, bus or truck, you need to have some sort of motor insurance policy to cover you and vehicle.

A motor insurance policy provides coverage from the insurance service provider against damage or loss caused to the automobile or its parts due to man-made and natural calamities.

If you are willing to buy a motor insurance policy for your vehicle for the first time, you will need to know that there are many terms that may be unheard to you. This post will help you know some common motor insurance policy terms to help you know more!

Common motor insurance terms at a glance

  • Insured Declared Value (IDV)

It is the most regularly used insurance claim jargons, Insured Declared Value (IDV) is the existing market value of the vehicle. It is the highest amount payable by an insurer for a vehicle insurance policy. In the unfortunate event of the loss of your vehicle, it is the maximum amount of money that you can claim. You can also ask for IDV if your car is stolen or is beyond repair.

  • Own Damage Premium (ODP)

The Own Damage Premium (ODP) is the premium that you will pay to avail an insurance cover equivalent to the IDV and is a major portion of your final motor insurance premium. It insures your automobiles against damages beyond your control such as natural disasters and man-made calamities.

  • Zero Depreciation Cover  

Opting for a Zero Depreciation Cover can let your insurance service provider waive off depreciation on replaced parts of your vehicle – helping you get a higher claim amount. You also need to know that this coverage is applicable only for some initial motor insurance claims. It may ask for a higher amount of premium but it is worth applying for it as the claim amount is always on the higher side.

  • No Claim Bonus (NBC)

No Claim Bonus (NBC) is one of the most widely used motor insurance terms. The No Claim Bonus (NBC) is nothing but the discount that you are eligible when you do not make any claim in a year which is a kind of reward for a smart use of your vehicle. The discount that you avail for doing so helps you lower the insurance premium while renewing the scheme.

  • Third-Party Coverage

One of another common motor insurance cover that is used is none other than the third-party coverage. The cover is useful as it offers the vehicle owner against any financial liability arising out of physical injury, death or damage to a third-party’s property. The beneficiary of the policy is third-party hence, the name is coined.

  • Personal Accident Cover

Beyond the damage done to the vehicle, a Personal Accident Cover keeps you protected from any unforeseen events leading to harm to your body like accidental death or total permanent disability in a road mishap.

The Bottom Line

If you are planning to buy any vehicle in India, as per the law, you will either opt for a third-party insurance or a comprehensive policy.

Now that you are aware of some of the common motor insurance terms, it will instill some confidence and motivation at the time of applying for the policy.

You can opt for a motor insurance policy online after comparing various deals on third-party websites and then decide as per your needs and budget.   

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