-
Policyholder
The policyholder is the person who purchases the car insurance policy and whose name appears on the policy document. The policyholder pays the premium and is entitled to receive the benefits and claim settlements as per the policy terms.
-
First Party
The policyholder or owner of the insured vehicle is the first party as per the policy terms. First-party car insurance consists of the own-damage cover and the personal accident cover for the policyholder.
-
Second-Party
The second party is the insurance company that issues your car insurance policy. It is responsible for providing coverage and settling claims as per the policy terms and conditions.
-
Third-Party
Third-party is any person, vehicle, or property that suffers injury, damage, or loss due to the insured vehicle. The third-party is neither the policyholder nor the insurance company.
-
Third-Party Liability Coverage
Third-party liability coverage is a mandatory type of car insurance for every car to legally drive on Indian roads. This term means that this policy financially protects you against liabilities arising from 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 and covers third-party property damage, limited to an extent of ₹7.5 lakh. The third-party car insurance policy is also known as a liability-only policy.
-
Comprehensive Coverage
The term comprehensive coverage is used for comprehensive car insurance, under which both third-party damages and own damages to the insured car are covered. A comprehensive car policy 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.
-
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 car insurance policy that you pay to get your car covered against any unanticipated accident while driving.
-
Insured Declared Value
The Insured Declared Value or IDV is the deciding factor of your car insurance premium. It is the maximum amount or compensation that you will receive from your insurer if the insured car has suffered a total loss or theft. The. 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.
-
Deductibles
A 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 car 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.
-
No Claim Bonus
The No Claim Bonus (NCB) is a discount on your car insurance renewal premium. You receive an NCB discount for not making a claim during a policy tenure. You can get up to a 50% discount if you have not made a claim for up to 5 consecutive policy years. Moreover, an NCB can also be transferred if you switch your insurance company.
-
Cashless Garages
A cashless garage is the authorized network garage of your insurer. 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. You just need to pay the compulsory and voluntary deductibles, if any.
-
Policy Endorsements
An endorsement refers to amendments or updates that are made to a car policy document after it has been issued. Endorsements are further divided into 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.
-
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.
-
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.
-
Total Loss
Car insurance companies declare a vehicle total loss when the cost of repairing the insured car is more than 75% of its IDV, or when the vehicle is completely destroyed or stolen and cannot be recovered. In such cases, the insurer pays the policyholder the IDV of the vehicle instead of repair costs.
