Wednesday, November 23, 2016

Important Motor Insurance terminologies worth knowing

If you are looking to buy / renew a car or bike insurance then you have either already encountered some jargon, or will encounter as you read the policy documents, which is difficult to understand. Following is the list of common terms that you must understand in order to fully benefit from the insurance policy:

1. NCB or No Claim Bonus: This is probably the easy term and quite straight forward. While purchasing a four wheeler or two wheeler insurance, this is the discount offered by the insurer for prudent use of your vehicle. This discount is available on policy renewals and can be as high as 50% depending upon the number of years your vehicle didn’t claim for damage.

2. Third Party Cover: This is the cover provided by the insurer to the victim other than the owner. This means that in an accident if there is damage to the property of other person (not the owner of the insurance policy) and the third party (the other victim) claims for the damage, then the insurer will pay for this claim on the owner’s behalf.

3. Zero Depreciation cover: If your policy has zero depreciation cover, then insurance companies waive off depreciation on replaced parts, which means that you get a higher claim amount. 

4. IDV or Insured Declared Value: The maximum amount your insurer pay is the IDV. It is actually the current market value of your vehicle. In case your vehicle is stolen or damaged beyond repair, you will get an amount equal to IDV

5. Own Damage Premium: This premium protects your vehicle from natural calamities and accidents beyond your control such as fires, explosion etc

Imp: To get the best rate on your two / four wheeler insurance renewals, always make sure to compare rates and offers across companies using portals such as policybazaar, bankbazaar, policybachat etc. Do not blindly go with the lowest offered rates but rather compare benefits vis-à-vis the prices offered. Also negotiating with your existing insurance provider might also help in either getting a better rate or in understanding the benefits they provide for the price difference. 

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