The process of selecting the perfect motor vehicle insurance plan can be a tedious task. However, a common problem that most people face while purchasing any type of motor insurance online is the technical jargon and terminology.
As a result, potential vehicle insurance buyers are confused and might not get what they are looking for. This problem can be put to rest by stating some of the important terms associated with this type of insurance. These include:
- Policy period.
- Insured declared value.
- Cashless garages.
- Personal accident cover.
- No claim bonus.
The person whose name in which the motor insurance policy has been taken or the group that has taken up the policy is referred to as the policyholder. Usually, the policyholder is the main beneficiary of the insurance policy.
Also, the policyholder can be a business or other entity. Note that the policy has two parties involved – the policyholder and the insurance company, or insurer.
A representative is referred to as the insurance agent or salesperson who sells insurance policies on behalf of the insurer or insurance company. Also, a broker is a person who is a representative who advises clients on which insurance policy to take.
The policy period begins from the day the insurance policy has been taken out by the policyholder. The period that extends from the first day of the policy to the last date before expiration is referred to as the policy period.
The motor vehicle insurance premium is the amount you pay to keep your motor vehicle covered against fires, theft, accidents, and other problems. As a policyholder, you have to pay a fixed policy amount, and on part of the insurance company, they provide relief to policyholders against losses.
Insured Declared Value
The term insured declared value or IDV is often used while discussing motor insurance online plans. IDV refers to the maximum amount that the policyholder is eligible to receive from the insurer. The IDV is calculated based on the vehicle’s current market value with depreciation factored in the valuation. In case the IDV is less, then the policyholder has to pay a premium that is lower.
However, it must be noted that the pay-out that policyholders will receive will be lower at the time of filing a claim. Therefore, one must pay attention to the IDV fixed at the time the policy is being drawn up by the insurer.
Another important term related to motor insurance in India is deductibles. The term deductible refers to an amount of money that is deducted from the claim amount that is borne by a policyholder.
Deductibles can help reduce the premium amount payable by the policyholder. There are two types of deductibles:
Voluntary: The policyholder can select a percentage to be deducted.
Compulsory: The percentage to be deducted is fixed by the insurer and the policyholder has to pay the claim amount.
Cashless garages refer to a network of garages where the policyholder need not to pay cash at the time of service. However, the drawback is that the service is limited to only garages that the insurer has a partnership with.
Personal Accident Cover
Personal Accident Cover refers to insurance cover meant for the person driving the vehicle. It is particularly helpful in case the policyholder meets with an accident and is hospitalized up to a certain limit.
No Claim Bonus
Another commonly used term associated with motor vehicle insurance is no claim bonus. It refers to a bonus or discount given to the policyholder if no claims have been made that year.
It is a way in which the insurer rewards the policyholder for driving safe. Additionally, when the no-claim bonus gets accumulated, then insurers give policyholders a significant discount for the payable premium up to a limit of 50% (which accumulates with every claim-free year).
Add-ons or riders offered by motor insurance providers can be added to a comprehensive or an existing insurance plan. There are several types of add-ons that are available, including zero depreciation cover, personal accident cover, key replacement cover, and roadside assistance just to name a few.