You struggle with your English lessons. So many new words to learn. This is when you reach out for a Dictionary, to understand the meaning of all those complicated words. What about your motor insurance policy? There are some terms you cannot understand in your motor insurance plan. You cannot find these words in a dictionary. What are these terms in your motor insurance plan, you cannot understand?
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Insured declared value popularly called IDV, gives the current market value, of your car/vehicle. IDV is the maximum amount you can claim, if your vehicle is destroyed, stolen or damaged beyond repair. You can claim this amount, in case of theft or damage to your vehicle.
IDV = (Selling price - depreciation) + (Accessories that are not included in listed selling price - depreciation) and excludes registration and insurance costs.
Remember: Do not quote an IDV, which is lower than the actual market value of your car. You might feel quoting a lower IDV, means paying a lower motor insurance premium. But, if you meet with an accident and your car is damaged, you might end up paying money from your own pocket. (Bear part of the expenses yourself).
Most of the premium you pay on your motor insurance plan, goes towards own damage premium. This is the premium you pay to avail an insurance cover, equal to IDV. Own Damage Premium insures your vehicle, against damage due to natural disasters like floods, earthquakes and also fire and explosions.
Remember: Own Damage premium depends on the model of your vehicle, cubic capacity, geographical zone and so on.
You have availed a motor insurance plan. Why not opt for a rider like zero depreciation cover, along with this motor insurance plan. A rider gives you additional benefits, but you have to pay a slightly higher premium. Your normal motor insurance plan, deducts depreciation on replaced parts. However, if you have zero depreciation cover, insurer does not deduct depreciation on replaced parts.
Remember: You get this cover, only for the first few claims you make. You must take the zero depreciation cover, even though your premium amount would increase. This would be a wise decision.
If you have not made any claim in the previous year, you are eligible for the No claim bonus. This is the reward you get for careful use of your car. You get a discount, which means you pay a lower premium, when renewing your motor insurance plan. You can get a high no claim bonus (NCB), on your motor insurance plan.
This is 20% in the second year and can go to nearly 50%, in the sixth year. Do not make claims for minor damages. Keep your NCB intact and get a massive discount on your motor insurance premium.
See also: Comprehensive Car Insurance Plan
Remember: You can transfer NCB from one insurer to another. You have to renew your motor insurance plan, within 90 days of the expiry of the old motor insurance plan.
You meet with an accident, which leads to death/injury/damage to property, of a third party (third party means someone other than you and the insurer). Your insurer will settle the claim. The victim of the accident, would file a claim against you and the insurer would settle the claim.
See also: Importance of Car Insurance
Remember: If you are driving in India, third party liability cover is compulsory.
Your car gets damaged in an accident and your motor insurance plan, compensates you for your loss. But what happens if you are injured in the accident? This is why you need personal accident cover. It safeguards you against unforeseen events (accidents), which cause you bodily harm.
You are covered against total disability, permanent total disability and permanent partial disability. Your family gets compensated if you lose your life in an accident.
Remember: Make sure your motor insurance plan offers personal accident cover.
Yes…learning these motor insurance terms, does not require a dictionary. Keep yourself updated on these motor insurance terms and make the best use of your motor insurance plan. Be Wise, Get Rich.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
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