When It Comes To Car Insurance, There Are A Few Terms You Should Be Aware Of.
Updated On Oct 18, 2023
Few terms of car insurance that everyone should know about. Read this article to know more about it.
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Most vehicle owners acquire a car insurance policy based on its coverage and premium but do not understand its terms and conditions due to a lack of knowledge of certain terminology included in the car insurance policy paperwork. Finally, this makes it difficult to implement the policy. As a reason, it is a good idea to familiarise yourself with the most common auto insurance terms before purchasing coverage. Let's take a look at some of the most prevalent vehicle insurance terms so you can make an educated selection.
TERMS THAT ARE USUALLY USED
d terms of a vehicle insurance plan.
The amount of money that insured people must pay to the insurance company in order to be covered by the policy.
Any form of injury, illness, or death that happens as a result of a car accident.
The term "insured" refers to the individual who is covered by a vehicle insurance policy.
The insurance company that offers coverage in return for payments of premiums.
The coverage of a car insurance policy refers to the features and benefits it offers.
It refers to the maximum amount of insurance or protection that an insurance company will give.
It is the amount of the repair or expense that the insured must pay before the insurance company will pay out during the claim settlement procedure.
Depreciation is the term used to describe the reduction in the value of an insured vehicle as it ages and wears out. It climbs in lockstep with the age of the vehicle, reducing the insurer's claim payout.
If an insured person's covered vehicle is damaged or stolen as a consequence of an accident or event, they can make a claim. A claim is an amount you want your insurance company to pay to compensate you for your loss.
Insured Declared Value (IDV)
The IDV is the current market value of the insured vehicle, which drops as it ages. In the case of automobile theft or total loss, it is the sum agreed upon by the insured and the insurer to be reimbursed.
No Claim Bonus (NCB)
Insurance companies reward policyholders who do not submit a claim throughout the policy year with NCB. It increases with each year of claim-free service and can reach up to 50%.
Third-Party Policy (TP)
Third-party vehicle insurance is the most fundamental sort of coverage that all drivers are required to have while on the road. It shields you against financial liability in the event of a third-bodily party's injury, death, or property damage.
Own-Damage Policy (ODP)
Damages to the insured car caused by an accident, theft, fire, natural or man-made disaster are covered by the own-damage automobile insurance policy.
The Overarching Policy
A comprehensive auto insurance policy protects the insured vehicle and its owner from third-party liability and damages.
You may go ahead and acquire a policy with a more aware mentality and make an educated selection now that you have a better grasp of the most common auto insurance terms. Using the aforementioned information, you'll be able to decipher the processes/outcomes described in an automobile insurance policy paperwork. It's crucial to read your policy paperwork thoroughly and, if required, get clarification from your insurance carrier.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.