Important Terms to Know before Buying Car Insurance

As per Motor Vehicle Act, Third Party Insurance is mandatory in India. Such a plan provides compensation in case of death or injury to third parties. It also covers third party property damage.

Besides, an insurance plan protects your car against man-made calamities such as acts of terrorism, vandalism, and riots, besides others. It offers protection against natural calamities such as fire, flood, hurricane, earthquake, and cyclone, among others. You may, therefore, purchase a car insurance plan and remain financially protected at all times.

It is imperative to have a complete understanding of different terms before availing of car insurance. Following are six basic terms related to car insurance.

1. Insured Declared Value

Insured Declared Value (IDV) is the maximum sum assured that the insurer will pay in case of theft or total loss of your vehicle. In simple terms, Insured Declared Value is the current value of your car in the market. It is calculated as the difference between the manufacturers’ selling price and depreciation. It is important to know that the payable premium amount is directly proportionate to the Insured Declared Value. Lower the Insured Declared Value, lower will be the payable premium, and vice versa.

2. No Claim Bonus

As the name suggests, No Claim Bonus (NCB) refers to the discount given by the insurance company for not making any past claims. Generally, insurance companies offer a 20% to 50% discount on the next premium payment if no claims have been made.

3. Personal accident cover

According to a report by the Government of India, there were around 4,80,652 road accidents in 2016. It is, therefore, necessary to avail of adequate coverage against such unfortunate events. A personal accident cover ensures that your nominee will be compensated with the sum insured in case you meet with an accident.

4. Third party cover

Third party coverage aids in protecting other people, vehicles or property, in case of an accident that occurs because of your fault. Such an insurance policy offers compensation to the third party and helps them recover losses. It covers the cost of the other person’s car as well as medical expenses.

 

5. Comprehensive cover

As the name suggests, comprehensive cover means extensive coverage to both parties involved in an accident. Such an insurance plan provides personal accident protection, coverage for damages to the vehicle, as well as legal liability to the third party. You may also seek additional coverage by opting for riders, such as zero depreciation rider, engine protection cover, and accessories cover, besides many others. This type of insurance plan offers end-to-end coverage and hence, is a popular insurance plan.

Add On Covers

Add on covers are additional covers that strengthens your policy by offering enhanced benefits and wide coverage at an additional premium amount.

Zero Depreciation Claim

Provides benefits against depreciation on parts at the time of a partial loss claim
What’s not covered?
Tire & battery costs

Loss of Use / Down Time Protection

HDFC ERGO Loss of User or Down time protection add-on policy reimburses a daily benefit towards the cost of alternate means of transport for the duration the insured vehicle is repaired or replaced.

Engine and Gear Box Protection Cover

It secures your car against any damage to engine & gear box against unpredictable weather or incessant rains. This add on cover is a savior and comes to your rescue especially during unpredictable weather conditions

No Claim Bonus Protection

On every claim free renewal you get discount in the form of No Claim bonus; however, accidents are unpredictable and we understand that. Considering this, HDFC ERGO provides an add-on cover No Claim bonus protection helps you in retaining it for the next renewal of your policy.

Emergency Assistance Service Program

This add-on cover helps you deal with any mechanical or technical breakdown or road accident. It aims at providing round the clock road assistance for a pleasurable driving experience. Further it has a bouquet of services which includes tire replacement cover, towing of vehicle to the nearest garage, emergency fuel delivery, battery jump start, accommodation arrangement, alternate travel arrangement, minor repairs on the spot etc

Emergency Assistance Wider Cover

This add-on assists when the keys of the insured vehicle are lost, misplaced or stolen. In such a scenario buying a new key may be cumbersome; under such circumstances we issue you a new set of keys subject to submission of police report.

You may avail of the benefits of a motor insurance policy by purchasing one from the best insurance providers. One such insurance company, HDFC ERGO, provides coverage against damage to vehicle, theft as well as third party liability. You may enjoy personal accident cover as well. HDFC ERGO offers cashless claim services at numerous authorized garages across India, thus preventing huge out-of-pocket expenses. You may, therefore, avail of optimum coverage through low-cost premiums.

It is imperative to have a thorough understanding of insurance-related terms. By doing so, you may make a well-informed decision and enjoy maximum benefits based on your requirements.

This blog has been written by

Mukesh Kumar| Motor Insurance Expert |36+ years of experience in insurance industry

A veteran in the insurance industry, Mukesh Kumar has the expertise of handling various functions like Business Development, Underwriting, Claims, Human Resources, Quality Management and Marketing. With rich knowledge of the industry, he loves to share his views on topics of insurance sector and takes special interest in educating people on advantages of having insurance.