Car insurance glossary: definitions and terminologies

Posted on: Jul 24, 2025 | 3 mins | Written by: HDFC ERGO Team

Car insurance glossary: definitions and terminologies

Any insurance policy contains certain typical terminologies and technical jargon, making it all the more difficult for lay people to understand. However, it is imperative to understand your policy entirely before you purchase one. This negates the chances of misunderstanding during claim settlement. We have explained specific car insurance terminology for easy understanding.

We have carefully elucidated a comprehensive list of car insurance glossary for better understanding.

Glossary of Car Insurance Terms in India (A–Z Definitions)

A

• Add-on covers: These are additional coverage purchased in addition to the basic plan to enhance the coverage span.

• Anti-theft device: A specialised device that can be installed in your vehicle to reduce the chances of theft.

B

• Break-in insurance: Denotes the break between two plans due to policy lapse, making renewal difficult.

C

• Compulsory deductible: A pre-determined amount you must pay during claim settlement. A higher deductible leads to lower premiums.

• Comprehensive cover: Includes third-party and own damage cover.

• Cashless garage: Tied-up workshops where the insurer settles bills directly.

• Consumables: Minor tools like nuts, bolts, and wires.

• Claim: Intimation sent to insurer about an incident for review and settlement.

• CSR: Claim Settlement Ratio – claims raised vs. claims settled.

D

• Deductible: The amount paid by the policyholder during claim settlement.

E

• Endorsement: Alterations made to the plan (e.g., spelling errors, modified components).

• Engine protection cover: An add-on that extends protection to the engine.

F

• First Notification of Loss: Initial intimation to the insurer post-incident.

I

• Insured: Refers to the vehicle in car insurance.

• Insurer: The insurance company issuing the policy.

• IDV: Insured’s Declared Value — the basis of claim for theft or total loss.

• Incurred Claims Ratio: Net claims / Net premium × 100.

• Legal liability: Compensation legally owed due to your insured vehicle’s involvement in an incident.

N

• NCB: No Claim Bonus – reward for not raising claims, reduces premium.

• Own Damage Cover: Policy focused on the vehicle's own safety.

• Outstation emergency add-on: Add-on for roadside help during outstation travel.

P

• Policyholder: The person who owns the insurance policy.

• Policy document: Official proof of coverage.

• Policy period: Duration for which the policy is active.

• Passenger: Occupants other than the driver.

• Premium: Amount paid to purchase the plan.

• Personal accident cover: Covers death or disability of the owner-driver.

• Proof of loss: Document supporting the claim request.

R

• Roadside Assistance cover: Emergency aid add-on during vehicle breakdowns.

• Return to Invoice cover: Offers invoice value (not IDV) for total loss scenarios.

T

• Third-party insurance: Covers damage to third-party property or injury. Mandatory in India.

• Total loss: Vehicle damage beyond repair.

V

• Voluntary deductible: Extra deductible opted by policyholder to reduce premium.

Z

• Zero Depreciation Cover: Add-on that skips depreciation calculations during claim.

Conclusion

We have listed all the important car insurance glossary terms to help you understand better.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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