Terms You Should Be Aware Of When It Comes To Car Insurance

Due to a lack of information of particular words included in the car insurance policy document, most car owners buy a car insurance policy based on its coverage and premium but do not grasp its terms and conditions. This finally makes it difficult to use the policy. As a result, before acquiring a vehicle insurance policy, it is a good idea to familiarise yourself with the most frequent car insurance phrases. Let's look at some of the most common phrases linked with auto insurance so you can make an informed decision.

LIST OF COMMON TERMS 

The following are some examples of frequent terms:

• The Policy of Insurance -

A written agreement or contract that specifies an automobile insurance plan's coverage, rates, and terms.

• Exceptional -

The fee that insured individuals must pay to the insurance company to be covered under the policy.

• Injuries to the Body -

Any type of damage, sickness, or death that occurs as a result of an automobile collision.

• Assurance -

A person who is insured under an automobile insurance policy is referred to as insured.

• Insurer (Insurance) -

The insurance firm that provides insurance coverage in exchange for premium payments.

• Availability -

An automobile insurance policy's coverage refers to the features and advantages it provides.

• Limitation -

It is the highest amount of insurance or protection that an insurance provider guarantees.

• Reimbursable -

It is the cost of repair or expense that the insured individual must pay before the insurance company pays up during the claim settlement process.

• Depreciation 

Depreciation refers to the decrease in the value of an insured automobile as it ages and wears out. It rises in tandem with the vehicle's age, lowering the insurer's claim payout.

• Claim

An insured individual can file a claim if their covered automobile is damaged or stolen as a result of an accident or incident. The amount you want your insurance to pay to compensate you for your loss is referred to as a claim.

• IDV (Insured Declared Value) -

The IDV is the insured car's current market value, which decreases as it becomes older. It is the amount agreed upon by the insured and the insurer to be paid in the event of car theft or total loss.

• NCB (No Claim Bonus) -

NCB is a reward given by insurance companies to policyholders who do not file a claim during the policy year. It builds up with each year of claim-free service and can go as high as 50%.

• TP (Third-Party Policy) –

Third-party auto insurance coverage is the most basic type of insurance that all drivers must have while on the road. It protects you from financial obligation for personal injury, death, and property damage caused by a third party.

• OD (Own-Damage Policy) –

The own-damage automobile insurance coverage pays for expenditures incurred as a result of damages to the covered car caused by an accident, theft, fire, natural or man-made disaster.

• The Comprehensive Policy -

A comprehensive automobile insurance coverage protects the covered vehicle and its owner against third-party liabilities as well as losses.

Take Away

Now that you have a better understanding of the most popular vehicle insurance words, you can go ahead and purchase a policy with a more mindful mindset and make an educated decision.

You'll be able to disentangle the processes/outcomes specified in a vehicle insurance policy document using the above information. It is critical to properly study your policy documents and, if necessary, seek clarification from the insurance company.

Also Read: How Do I Choose And Decide On The Right Insurance Plan?

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.