Purchasing or renewing car insurance may seem confusing as you come across terms like the IDV, own damage or third-party liability.
These terms may be technical, yet understanding the difference between a policy that only meets the legal requirements and one that is able to really take care of your vehicle is highly crucial.
In this regard, this blog will assist you in understanding the meaning of the most important terminologies, comparing different types of policies and how to buy car insurance online.
The Language of Car Insurance
Car insurance involves certain words that specify how your protection would be. Having knowledge of these terms helps you make an informed decision.
- Insured Declared Value (IDV): It is the current market value of your car, as stated at the time of purchasing the policy. It is the amount that your insurer is allowed to pay in case your vehicle is stolen or it is declared a total loss. The greater the IDV, the more you pay in insurance since the liability of the insurer is higher.
- Own Damage (OD): This term is applicable to the damages caused to your car because of accidents, fire, theft, or natural disasters.
- Third-Party Liability: This is used to cover the damages or injuries that your car causes to some other person or their property. It is a legal minimum in India to all vehicle owners.
- Comprehensive Cover: This covers both own-damage and third-party liability.
- Add-ons: This is optional coverage that gives extra coverage. Widely used optional covers are zero-depreciation cover, tyre cover, return-to-invoice cover and roadside cover.
- No Claim Bonus (NCB): This is a discount given by the policy issuer if you have not made any claims within the last policy year.
Key Policy Types Compared
Car insurance in India has been categorised into three major types. They all have their purpose, price, and protection. Knowing these choices can allow you to select the policy that best suits the value of your car and usage patterns.
Third-Party Only Insurance
This is the simplest type of car insurance and it is a legal requirement for all vehicle owners. The third party car insurance insures you against liabilities if your vehicle causes damage to a third party.
However, it does not include any damage to your own car in case of an accident, fire or theft.
Comprehensive Insurance
Comprehensive policy has broader protection since the liability of third parties and own-damage cover are contained within a single channel.
It can protect you from financial losses if your car is damaged by accidents, fire, or natural disasters such as floods and earthquakes or is stolen.
Standalone Own-Damage Cover
This policy is focused on every vehicle owner who has already taken third-party insurance and wants to take coverage for their own vehicle.
It allows you to purchase cover to prevent accidental or natural damage without the need to convert to a complete comprehensive cover.
This versatility makes it suitable for individuals who would like to tailor their coverage based on their needs and budget.
For a personalised option, you can have a look at HDFC ERGO’s comprehensive and third-party car insurance. They are accessible to more than 9,000+ garages for cashless claims.
Ways to Select the Right Policy for You
Your ideal policy depends on your vehicle, driving style and financial ease. Here is what you can do to select the right car insurance for you:
1. Assess Your Needs
Look at the age of the car, the current value, usage frequency and the parking location. Consider how comfortable you are with risk.
You may also need to evaluate factors in your daily commute and driving conditions. This can include the distance and traffic you get while travelling for day-to-day needs.
2. Balance Budget and Coverage
A third-party plan is suitable for less-used or older cars. While full coverage is reasonable in newer or expensive cars, or in vehicles that are used often.
3. Compare Policies
See more than the premium price. Compare the contents of each plan, such as IDV, additional benefits, claiming process, and the size of cashless garages.
A larger garage network and a higher claim settlement ratio can ensure a smooth service.
4. Final Checks Before Purchase
Ensure that the policy meets the legal requirements of third-party liability. Know about any inclusions and exclusions. Make sure you renew your policy on time to retain your No Claim Bonus and not lapse to re-insurance or incur increased expenses.
Final Thoughts
Breaking down car insurance language eliminates the confusion and gives you a great way to make a choice.
Being aware of IDV, own damage, third-party liability and exclusions enables you to know what protection you are really paying for.
Before finalising car insurance policies, take a few minutes to read the fine print, check the claim process and compare coverage options.
