How well do you know these motor insurance terms?
If you ask a car enthusiast about his new vehicle’s engine capacity, mileage and anti-lock braking, they’ll be able to talk to you for days. However, very few people are aware about terms such as IDV, NCB and Third Party coverage. These terms, though they may seem alien, have a lot of meaning in motor insurance and acquire a lot of significance when you are buying new vehicles. Let us take a look at some bike or car insurance terms that will help you make an informed decision on your motor insurance policy.
Insured Declared Value (IDV):
IDV is the current market value of your vehicle that you need to declare at the time of policy purchase. It denotes the highest sum payable by the insurer in the event of theft or total loss claims.
Since IDV dictates the premium and reimbursement at the time of claim settlement, be sure to provide the actual market value. People tend to quote reduced IDVs to get lesser premiums but they fail to realize that this also means inadequate compensation during theft or total loss claims.
Third party motor insurance:
Third party insurance covers losses and damages to third parties and their property in the event of an accident. The Motor Vehicles Act (1939) has mandated third party motor insurance for all vehicles plying on the road. Third party insurance does not cover damages to your own vehicle.
No Claim Bonus:
The No Claim Bonus (NCB) is a discount on the own damage premium awarded to drivers who drive safely and responsibly. The NCB is awarded after one year of safe and claim-free driving for every subsequent year of claim-free driving. It is to be noted that NCBs are awarded to drivers and not vehicles and so can be transferred to new vehicles subject to sale of old vehicle.
Motor insurance add-on covers:
Add-on covers provide additional coverage on your policy for additional premium amounts. For example, the Zero Depreciation Cover is an add-on cover that ensures that the insurer waives depreciation on replaced parts and repairs, resulting in an increased claim settlement amount.
HDFC ERGO offers attractive motor insurance quotations for all your motor insurance needs. Now that you are up to speed with all the buzzwords about motor insurance, you are ready to take on purchasing motor insurance all by yourself!