Buying a car or bike insurance has become hassle-free, thanks to the insurances companies offering the facility to buy online insurance. However, there are terms, acronyms, terminologies one should know about in order to understand an auto insurance policy.
- Insured Declared Value (IDV) – It is the maximum Sum Assured fixed by the insurer which is provided on theft or total loss of a vehicle. The insurance premium is calculated on the basis of the IDV of the vehicle, which is basically the depreciated value of the vehicle agreed upon by the insurer and the policyholder. The IDV of a vehicle reduces with age and provides the current market value of the vehicle. If the vehicle suffers a total loss, IDV is the compensation that the insurer will provide to the policyholder. One can also opt for a higher IDV by paying an extra premium.
- Own Damage (OD) – Liability insurance which is mandatory covers all the legal liabilities that have been caused by your vehicle to a third party, leading to loss of life and property of the third party. This does not cover your vehicle in case of natural calamities or accidents caused by self. In such cases, you cannot claim insurance unless your vehicle is covered for Own Damage.
- Own Damage Premium (OD) – Payment of OD premium entitles you to claim compensation in case of theft or damage of your vehicle due to natural calamities like storms, earthquakes, floods etc. Own damage car insurance also covers man-made disasters like vandalism, riots and terror attacks along with providing coverage for external accidents. OD is optional insurance.
- Depreciation Waiver – it is also commonly known as zero depreciation policy. Zero depreciation cover promises a comprehensive coverage without factoring in for depreciation. The Insurer will not deduct this depreciation and you will be entitled to the full price of the parts replaced (plastic parts, rubber parts etc.) This means when you make a claim, you will get the full claim amount without any deduction for depreciation on the value of parts being replaced.
- No Claim Bonus (NCB) – If you do not make a claim during the policy period, a No Claim Bonus is offered on renewals. Insurers reward policyholders by giving them substantial discounts on the Own Damage Premium. However, the NCB is applicable only if the policy is renewed within 90 days of the expiry date of the previous policy.
- NCB Protector Cover – This cover helps to protect the No Claim bonus earned during the years by not claiming insurance. NCB covers ensure low premiums and one can save 20 to 50% discount on the base policy based on your no claims history.
- Aggravation Cover – Aggravation Damage Cover is also known as Engine Protector Cover helps to ensure your vehicle Engine – internal parts, Gear Box – internal parts, Transmission or Differential internal parts, and Power Steering Pump internal parts damaged due to driving through waterlogged roads during monsoon. Different companies provide different covers depending on the policy and terms.
- Tyre Cover Clause – This cover ensures your tyres and tubes which may have been damaged even if the vehicle has not met with an accident such as impacts due to cuts, tyre bursts, bulging of side wall, wear out of tyre due to hard braking or bad roads.
- Voluntary Deductible – This the amount of money the person would pay from his pocket which claiming insurance in case the vehicle meets with an accident. The amount depends on the policyholder who chooses the limit factoring in his affordability and risk. Choosing a higher amount of Voluntary Deductible helps to reduce the insurance premium during renewals.
- Key Protector/replacement Cover – This cover safeguards one in the case the car keys are lost or stolen, and one has to request a new one from the manufacturer. The more luxurious and high-end the car model is, more expensive the new set of keys will be. This cover will reimburse the expenses incurred for procuring a new key. Depending on the company policy the key cover will reimburse the cost of making a new key and expenses incurred in case the lock also needs to be replaced due to loss of keys.
