5 Car Insurance Terms Everyone Should Know
- Author :
- TATA AIG Team
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There is no denying the fact that vehicle insurance is an essential financial requirement as it secures the policyholder and their vehicle in the event of an accident. However, to avail of all the benefits of car insurance for a vehicle, it is important to be aware of the terms associated with the policy.
5 Motor Insurance Terms Everyone Should Know
As vehicle insurance is a contract, being aware of the terms and conditions is essential to avoid confusion during times of crisis. Novice insurance-holders might feel overwhelmed with the insurance jargon; however, if you are seeking online insurance for your vehicle, then you can undertake research and even opt to pay vehicle insurance online for a hassle-free and safe procedure.
Vehicle Insurance in India
There are essentially three categories of vehicle insurance: third-party insurance, own damage insurance, and comprehensive insurance. Here is a brief explanation of each of these:
Third-party insurance: The third-party insurance or liability insurance covers any accidental loss or damage that has been caused by the policyholder to the third-party vehicle, person, or property. As per the Motor Vehicles Act, every car owner must have at least third-party insurance.
Own-damage insurance: As the name suggests, the own-damage insurance cover compensates for expenses incurred for the repair or replacement of parts of the policyholder’s car owing to an accident.
Comprehensive insurance: The damages to your car can be beyond an accident, and comprehensive insurance can protect your vehicle against unpredictable instances.
Check our resources to understand more on Comprehensive Insurance for Car & Bike.
Comprehensive Car Insurance
Comprehensive Bike Insurance
Five Important Vehicle Insurance Terms
Popular to contrary belief, vehicle insurance details are straightforward, and so it is easy to make an informed decision. To dismiss the ambiguity regarding terms associated with insurance for a vehicle, we have enlisted five of the most crucial ones that every policyholder or insurance seeker must be aware of:
First Party, Second Party and Third Party in insurance for a vehicle
In a vehicle insurance contract, the first party refers to the insured/policyholder, the second party means the insurance company, and the third party is any individual or group of individuals affected due to an accident caused by the first party’s vehicle.
So, if you buy Tata AIG car insurance, you are the first party, and Tata AIG is the second party. When you are driving your car, and it accidentally hits a pedestrian, causing them injuries, then that person becomes the third party and is liable for damages under your third-party insurance cover.
Insured Declared Value (IDV) and Sum Assured
IDV refers to the sum assured, or the maximum claim that your insurance company will pay in case of theft or total damage (beyond repair) of your vehicle. IDV is calculated by adjusting the manufacturer’s selling price for depreciation according to the age of the vehicle.
Add-ons or Riders
Insurance riders amend the terms of a basic insurance policy to strengthen it and add an additional layer of protection. Riders come with an added premium cost. With the right insurance riders, policyholders can save a lot of money.
Tata AIG insurance comes with the benefit of 12 insurance riders to provide all-inclusive protection. Some common car insurance riders include:
Zero Depreciation Cover: This is a bumper-to-bumper car insurance add-on that leaves out the depreciation factor from the coverage, thereby providing the policyholder with the complete insurance cover.
Road-side Assistance: With this car insurance add-on, the insurance company provides on-the-ground assistance in case your vehicle breaks down while in transit.
Engine Protection: With this rider, the policyholder can protect their engine against damage, including replacement or repair expenses of internal parts of the engine, transmission, gearbox, differential assembly, etc.
No Claim Bonus (NCB): This is a reward by the insurance company made to the policyholder if no claim is made by the latter in a policy year. The No Claim Bonus (NCB) discount can be availed of on your insurance premium at the time of renewal of online insurance for your vehicle. It is a progressive discount that goes up with every consecutive claim-free year. The discount percentage starts from 20% for the first claim-free year, and the maximum discount is capped at 50% after 5 no-claim years.
Number of consecutive claim-free years No Claim Bonus discount on renewal premium 1 claim-free year 20% 2 claim-free years 25% 3 claim-free years 35% 4 claim-free years 45% 5 and more claim-free years 50%
Claim Settlement Ratio: The claim settlement ratio is a metric to gauge the percentage of insurance claims the insurance provider has settled during a financial year. It is calculated by considering the number of claims the insurance company receives during the period as well as the pending claims from the previous year. The claim settlement ratio is a crucial factor to consider before you purchase online insurance for your vehicle.
Buy car insurance from Tata AIG
Tata AIG insurance is a performance-driven company that promises speedy claim settlement processes. Our customer-centric approach is the reason why we have more the 5 crores of happy customers. The insurance for a vehicle by Tata AIG comes with the option of 12 unique riders to provide all-inclusive protection. Additionally, in keeping with the current pandemic requirements, policyholders can opt to pay for vehicle insurance from their homes. It is easy to pay vehicle insurance online by simply visiting the Tata AIG website.
Before you buy insurance for your vehicle, it is important to know vehicle insurance details and be aware of the terms associated with the policy. We hope that we have eased the journey towards the right insurance purchase by explaining some of the crucial terms. Insurance-seekers can also compare car insurance prices and policies to find the one that is best suited for them.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.