A complete guide to Car insurance terms, types of insurance and how to choose the best insurance for your vehicle?

Car insurance

Car Insurance and You will learn about:

  • Car Insurance Terms you should know before you claim.
  • Types of Car Insurance.
  • What damages are covered?
  • Damages that are not covered?
  • How to select best insurance plan for your car?An Insurance policy is a must for everyone. We generally do not take out time to study and understand the policy as we do to check out the latest mobile phones or any recent launch of a new car model.  We understand the features of the mobile or the car before we buy isn’t it?  Insurance policies are the same, it should be understood and it is mandatory to have insurance for your car.

    What is Car Insurance?

    It is an insurance policy which protects the vehicle against financial loss due to theft or damage to the vehicle. Motor insurance should be done for two-wheeler and four-wheeler; however, the premium for a two-wheeler is low. There are basically two types of motor insurance covers such as

    • Third party insurance cover is also known as liability cover
    • Comprehensive vehicle insurance
    • One can also go for Add-on insurance cover for vehicles

    Third party Cover:

    Motor insurance also covers damage caused by third party or property. Third party cover will help other people, vehicle, and property, for example in an accident if you happen to damage the other person’s vehicle then the damage can be claimed under third party cover as per the policy terms and conditions. It also comes with a low premium and the medical expenses of the injured driver of the car you damaged are also covered under Third party liability.

    What isn’t covered under third party insurance is the damage to your car or any injuries occurred to you. For that coverage, you would need a comprehensive insurance policy.

    What is a comprehensive insurance policy?

    Comprehensive is a total insurance policy which offers a wide range of coverage options such as accidental damage to self or third party. It also covers damages caused by humans and natural calamities. Comprehensive insurance policy will also cover more than just vehicle collisions such as

    • Breakage of glass (e.g. windshield).
    • Flood waters.
    • Fire incidents.
    • Damage from objects like missiles or falling objects.

    Comprehensive insurance is always recommended as this insurance is the highest form of protection for your car. Features of a Comprehensive Insurance policy are:

    • Protection against damages from accidents even if it is your fault.
    • No extra premiums for third party cover in case of accidents.
    • End to end protection of your car in case of natural calamities or theft.
    • You can also opt for add-on cover along with comprehensive insurance policy.

    What is Add-on cover?

    This insurance will provide you engine replacement, personal injury protection cover, roadside assistance and zero depreciation cover.

    Let us have a look at the exclusions of Comprehensive Car Insurance

Insurance terms you should be aware of: Insurance papers have certain terminology which is very important to understand as these terms play a major role during claims, buying a new policy or even when you are renewing your insurance policy. Let us have a look on below insurance guide to the important terms mentioned in the policy

  • Insured Declared Value or IDV: It is commonly used in car insurance and IDV means the current market value of your car. It is the highest sum payable by the insurance company for a car insurance policy. If the vehicle is stolen or damaged beyond repair, a total loss this would be the amount you can claim from the insurance company. Never declare the IDV less than the market rate, you may have to pay a lesser premium but you will be at the loss when you claim your damage.
  • Personal Accident Cover: It basically safeguards you financially against unforeseen situations like total disability due to a road accident and accidental death. It is very much essential and one should make note of it and ensure it is covered as most of the insurance company does not include personal accident cover.
  • No Claim Bonus (NCB): This is a reward or a discount when you have not made any claim to the insurance company. This discount also lowers the burden of the premium amount. Hence it is worth for not claiming for minor damages as NCB can be 20 % for the 2nd year and up to 50% for the 6th     
  • Zero Depreciation Cover: As per standard rule depreciation is deducted on the replaced parts by the insurance company but if you opt for zero depreciation cover the insurance company will waive off the depreciation on replaced parts and you will get a higher claim amount.
  • Own Damage Premium: One should specifically ask for it, as own damage premium provides coverage against losses occurred due to earthquake, tornadoes and man-made calamities like fire and explosions.

How to choose the best insurance plan for your car?

Researching and gathering information is a very important step in finalizing the insurance policy for your car. But what information to look for is also important right? We will take you through the points:

  1. Compare the features of different insurance companies: Write down the features of all the insurance companies you contacted and shortlist before finalizing the best insurance policy for your vehicle. Features to check for comparison study are third party cover, coverage against personal accident and own damage cover.
  2. Thoroughly go through the reviews of policyholders: Many customers post their reviews on the company’s website you can consider the genuine reviews be it good or bad. Good reviews are IN and bad reviews are OUT. You can also ask your friends and relatives about their experiences of the car insurance they hold and you will have enough data to analyze and decide.
  3. Negotiate: Until you do not negotiate you would not know about the chances of getting benefits from the insurance companies. If you are a responsible driver, and there is no delay in paying the premium, there are not too many claims from your end you might also get a discount from your existing insurance company.
  4. Do not fall prey to the internet flooded discount schemes: Always compare your premium in the registered website of the insurance company. Ensure that the company calculates the premium on the fixed IDV. At least check 3 insurance companies for the comparison of the premium amount.
  5. Check on all the insurance terms mentioned above such as No Claim Bonus, Zero Depreciation cover, Personal Accident cover, Third party or liability cover.
  6. Refer to the Claim Settlement Ratio of the insurance company: If the track record of claim settlement ratio is not good of the insurance company then strike off the company from your list and opt for the insurance company only if the track record is good.

Car insurance is absolutely essential and doing your homework before finalizing the best insurance policy is also required and above all, to avail, the claims pay your premium on time and Always Drive Safe.

You can also learn about travel Insurance

What is Travel Insurance and why it is your best friend during your vacation?


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