Car Insurance Terms You Should Know - Car Insurance

 The Motor Insurance of India makes it absolutely necessary to have at least a basic car insurance policy if you want to drive on Indian roads. Without this, you won’t be allowed. Doing so is punishable under law. Thus, it is important to get car insurance, which ultimately is for your benefit.

When trying to buy car insurance, new customers often have the problem of not understanding the technical jargon of the industry. Thus, they have trouble understanding the insurance plans as well.

In this article, mymoneykarma explains some of the most common terms of the car insurance industry.

    Third-party liability cover: Third-party liability cover is the type of car insurance which compensates a third party when you were involved in an accident resulting in injury, death or property damage of the other party. While the insurance cover for cases of death and injuries is unlimited, it is worth remembering that there is a cap of Rs. 7.5 lakhs against third-party’s damages. Third-party liability cover is the minimum level of car insurance you need to operate on Indian roads.

    Own Damage Cover: This is the part of the larger motor insurance policy. It covers and protects your car from various forms of damages like theft, fire, accidents, man-made disasters, natural calamities, etc. However, it won’t pay for third-party death, injuries and property damages.

    Legal liability: When the car you’ve insured had got involved in an accident, and when a third party has suffered damage, you’ll have to pay for the said damage. However, if your car has a car insurance policy, its third-party liability cover shall take care of the problem.  Under this, the victim will be compensated.

    Comprehensive policy: This type of car insurance policy protects both you and your vehicle in case of various accidents. It covers man-made damages, natural calamities, external accidents, terrorist acts, malicious activities, in-transit damages, landslides and rockslides, liabilities to a third-party, explosion, lightning, fire, explosion and self-ignition.

    Anti-theft device: These are devices installed in your car which reduce the chances of your car getting stolen. If you have already installed it, you can get car insurance at lower premiums since such cars are seen as safer. Common anti-theft items include car alarm, steering wheel lock, vehicle tracking system, electronic immobilizer and tire lock.

    IDF: Insured Declared Value of a car is the sum insured under its motor insurance. This amount is equal to the manufacturer’s selling price minus the depreciated amount. The listed price is always agreed upon during the time of signing up for the policy.

    Voluntary deductibles: During the time of buying a car insurance policy, you have two choices. You can choose to bear either all or part of the claim payouts. The amount you agree then to pay is termed as Voluntary Deductibles. Getting a high voluntary deductible gives you a big discount in premiums.

    Compulsory deductibles: This is the section of your car insurance claim amount that is to be paid mandatorily. The amount depends on the car’s cubic capacity. Such deductibles are used by all car insurance companies to check car owners from raising claims too frequently, especially for small damages. Unlike voluntary deductibles, compulsory deductible amounts are smaller and cars can be paid back easily during filing or claims.

    NCB: Its full form is No Claim Bonus, and is offered to car insurance policy holders at the time of renewing the policy. Each year, you get more NCBs if you don’t file for claims. In the 1st year of policy renewal you get a 20% discount from premiums, 25% discount after 2 claim-free years, 35% discount from premiums after 3 claim-free years, 45% discount from premiums after 4 claim-free years, and 50% after 5 claim-free years.

    Cashless garage: Car insurance companies today have tie-ups with garages around India where their customers can get cashless transactions for damage repairs. These are network garages, so always pick a policyholder who has a reasonably big network of such garages. In case of damages, you can get your car repaired at such centers without hassles. At such times, the repairing bill is covered by your insurer. All you need to pay is the deductible and depreciation part on the car parts replaced.

Car Insurance - Why Is Motor Vehicle Insurance Mandatory in India ?

The moment it was observed that there is a distinct growth in the sale of cars in the country, authorities knew that traffic accidents could not be far away. Traffic accidents and crashes present a wide range of damages, not just to the car but even to humans. The damage can be so high that you may not be able to pay for it. Thus, it makes sense to get car insurance when buying a new car.

Why get car insurance?

With the growth of the Indian economy, many came to find that they have considerable disposable income at hand. Coupled with the fact that car loans are cheaper now, it is easy to buy a car. Some buy more than one.

When you get a car, it is important to get car insurance as well. In fact, you can’t drive in India without one, according to the Motor Vehicles Act of 1988. There are several reasons for this:

• Car insurance limits your liability: A car insurance covers you from legal liabilities to a third party during an accident.
• The insurance plans cover the injury or death of a third party.
• It covers third party damages as well.

There are other benefits as well!

It pays for your hospitalization: Some car insurance companies give coverage for personal accident hospitalization in a third party insurance plan. It is useful as it pays for minor to serious injuries. When hospitalization is involved, you do not need to pay the full fees. The car insurance company shall pay a part of it.

It keeps you stress-fee: In case of a car accident, expenses can be huge. Having car insurance lets you know that you are covered no matter what happens.

Here is why you need to get comprehensive car insurance

It is not mandated that you have to get comprehensive car insurance, but it is advised. It includes:

• Third party liability cover: This is very similar to the third-party liability coverage.
• Own damage cover: This is what sets the comprehensive car insurance apart. It protects you from car damages caused by yourself. It protects your car from natural calamities, accidental damages, in-transit damages, and more. It includes a personal accident cover for the owner or driver as well.

Remember, a comprehensive car policy costs less if you buy it online. So that’s an added advantage of getting your car insurance policy online.