10 Essential Car Insurance Terms You Need to Know

Having a legal car insurance policy is mandatory for every car owner as per the motor laws in India. However, before purchasing a motor policy for your four-wheeler, you must know a few essential car insurance terms. Read on to know about these terms in this article.

Read more


third-party-rates

Third-party rates expected to increase* soon. Renew today!

third-party-rates

Third-party rates expected to increase* soon. Renew today!

Get Car Insurance starting at only ₹2072/year*
Save upto 85%*
Chose from 20+ insurers
51 lakh+ Cars insured
Processing
Other options
Top Plans
Cashless Garages
253
Plan type
Comprehensive
Starting from
₹ 2,727
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
268
Plan type
Comprehensive
Starting from
₹ 2,757
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
1024
Plan type
Comprehensive
Starting from
₹ 2,868
Check premium
Claim Advantage
Spot Claims Upto Rs. 30,000
Repair service at select cashless garages
See more plans

Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

Know These 10 Important Car Insurance Terminologies

Understanding various terminologies of four-wheeler insurance is essential to know so that you can buy a suitable motor insurance policy for your four-wheeler. Here are 10 important car insurance terms that you must know before buying a policy:

1. Third-Party Liability Coverage

Third-party liability coverage is mandatory coverage that every car owner must have to legally drive on Indian roads. This four-wheeler insurance coverage financially protects against liabilities arising out of third parties during a road accident involving the insured car. A third-party liability policy provides unlimited coverage for the death and injury of a third party. It also covers third-party property damage, which is limited to an extent of Rs. 7.5 lakh. If you are a car owner in India, you must at least own a third-party car insurance policy.

2. Comprehensive Coverage

Comprehensive coverage is the second type of coverage offered in motor insurance. This coverage is not mandatory but is advisable as it offers extensive coverage to the car owner. A comprehensive car policy covers the insured car against own damages as well as third party damages. It compensates the policyholder if the insured car has sustained damages due to events like road accidents, natural disasters, man made calamities, theft, fire, etc. along with third party liabilities. If you are looking for wider car coverage, then the comprehensive car policy can be the right choice for you.

3. Car Insurance Premium

A premium is the fixed amount that you will have to pay for purchasing a car insurance policy. In other words, it is the price of the motor insurance policy that you pay to get your car covered against any unanticipated accident while driving. You can compare motor insurance premiums offered by different insurance companies on websites like Policybazaar.com before purchasing a policy for your four-wheeler.

4. Insured Declared Value

An Insured Declared Value or the IDV is one of the most important car insurance terms. It is the maximum amount that you will receive from your insurer if the insured car has suffered a total loss or theft. The Insured Declared Value is essential as it is the maximum compensation paid during claim settlement. The IDV is calculated by deducting the amount of depreciation borne by the insured vehicle till the time of claim settlement from its total value.

Thus, you must pay attention to the IDV of the car when purchasing a four-wheeler insurance policy. Make sure it is at par with the current market value of your car.

5. Deductibles

Deductible in motor insurance is a part of the claim amount that you will pay from your pocket during claim settlement. The rest of the claim amount is paid by the insurance company. It is classified as voluntary and compulsory deductible. A compulsory deductible is the deductible that you will be required to pay mandatorily whenever a claim is registered. The value of compulsory deductibles is based on the cubic capacity of a car's engine.

On the other hand, a voluntary deductible is the part of the claim amount that you voluntarily choose to pay at the time of claim settlement. You can also choose not to pay voluntary deductibles by opting for zero voluntary deductibles when you purchase a car policy. However, opting for a higher voluntary deductible will reduce the premium of your motor insurance policy.

6. No Claim Bonus

A No Claim Bonus is yet another one of the important car insurance terminologies. It is a discount on your renewal premium that you receive for not making a claim during a policy tenure. You can get up to a 20% to 50% NCB discount if you have not made a claim for up to 5 consecutive policy years. Moreover, an NCB can also be transferred if you renew your four-wheeler insurance policy from some other insurance company.

7. Cashless Garages

A cashless garage is the authorized network garage of the insurance company whose motor insurance policy you have purchased. In a cashless garage, you can get your car repaired without having to pay the repair amount from your pocket. Once the repairs are complete, the insurance company pays the repair bill directly to the cashless garage and your claim gets settled. Cashless garages are beneficial as they are authorized and less cumbersome when it comes to claiming for repairs.

8. Policy Endorsements

An endorsement refers to amendments or updates that are done to a car policy document after it has been issued. Endorsements can be either premium bearing or non-premium bearing. Any endorsement that increases the amount of premium is termed a premium-bearing endorsement. These include the addition of a CNG/LPG kit, updates in the price of the vehicle, installation of additional accessories, modifications to the car, etc. A non-premium-bearing endorsement doesn't affect the premium directly. These are changes in the car's registration number, policyholder's address, nominee details, etc.

9. Add-on Covers

Add-on covers are additional covers that you can purchase to enhance the coverage of your four-wheeler insurance policy. An add-on cover can be purchased by the same insurance company by paying an extra premium over your existing four-wheeler insurance premium amount. Some add-on covers that are offered by almost all motor insurers include zero depreciation cover, engine protect cover, NCB retention cover, personal belongings cover, roadside assistance cover, etc.

You can purchase an add-on cover only with a comprehensive or own damages policy to further increase their coverage. However, make sure to not purchase unnecessary add-ons as they will only increase your premium amount.

10. Personal Accident Cover

A personal accident cover is a compulsory cover provided by an insurance company to financially protect the owner/driver of the insured car. It compensates the owner/driver against accidental injuries, disability, or death. It is mandatory only for the owner/driver but can also be purchased for other passengers as an add-on cover by paying an extra premium. The amount of personal accident cover to be provided under a comprehensive car policy is set to Rs.15 lakh by the IRDAI.

Wrapping Up!

Apart from being a mandatory cover, car insurance is very essential to protect your car against heavy repair expenses that may arise due to unexpected events like a road accident. Knowing the above-mentioned car insurance terminologies can help you to purchase the right motor insurance policy for your car. Before selecting a four-wheeler policy, you can also compare multiple motor insurance plans on insurance broker platforms like Policybazaar.com.

Written By: PolicyBazaar - Updated: 19 April 2022
You May Also Like
  • Transferring Car Insurance from One Person to Another

    Transferring Car Insurance from One Person to Another An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance transfer to the new owner. But sadly, most people have...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall saf...

    read more
  • Money Saving Advice for All Car Owners

    Money Saving Advice for All Car Owners After a dream home, a dream car is your second-largest purchase that you make in your lifetime. But the expense does not cease when you drive off the car dealer's lot. Read mor...

    read more
  • Difference Between Comprehensive Insurance and Third Party Insurance

    Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage that pays for the repair or replacement of vehicle damages resulting from an incident. Comprehensive ca...

    read more
  • Types of Motor Insurance

    Types of Motor Insurance The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, ...

    read more

Find similar car insurance quotes by body type

Hatchback Sedan SUV MUV
insurance-ka-superhero
Search
Car insurance save up to 85
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices

Why buy from Policybazaar?

  • 24x7 Claims Assistance
    NEW
  • Cashless Assurance
  • 3-Day Repair Assurance
  • Free Pickup & Drop
  • Self Video Claims
  • Windshield Claims At Home
View Plans

Car insurance articles

Recent Articles
Popular Articles
Manual versus Automatic Car Insurance - Effect on Insurance Premium

12 May 2022

When it comes to transmission systems in cars, there are two...
Read more
Everything You Need to Know About Private Car Insurance

09 May 2022

A car insurance policy is not just a mandatory requirement but...
Read more
All You Need to Know About CNG Car Insurance

06 May 2022

If you are planning to get a CNG kit fitted in your car or...
Read more
Can I Claim Insurance for Car Scratches in India?

02 May 2022

Yes, you can claim insurance for car scratches and dents in India...
Read more
How to Buy a Car Insurance Policy Without Paying a Commission?

02 May 2022

While buying a car insurance policy, a broker or an agent helps...
Read more
Car Depreciation Calculator
If you are looking to purchase a new car or planning to sell your existing one, it is important to know how...
Read more
Transferring Car Insurance from One Person to Another
An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance...
Read more
Check Car Insurance Status Online on Parivahan Sewa/ RTO?
In India, buying car insurance is a compulsion for every car owner. It doesn’t matter if you are an excellent...
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Losing important documents, such as your car insurance documents, can be daunting. In such a state of affairs, the...
Read more
Multiple Ways To Check Your Car Insurance Status Online
All insurance companies in India now have a digital presence. It not only makes it easier to buy insurance online...
Read more