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Insurance

Terminologies You Should Know

In India, the Motor Vehicles Act prescribes that all the vehicles plying on public road should haveinsurance covering at least third party liability. This is irrespective of whether the policy covers damagesof the owned car.

Car insur ance policy offers you insurance cover  for accidental damage caused to your car, or injury tothird parties or damage to third party property. Before buying a policy it is really important that you

understand the jargons Insur ers use. Learning the terminology will help you clearly understand the cover and make an informed decision. Here’s a look at the most important terms you should be familiar with:

1. Own Damage (OD)

This covers loss or damage to the vehicle insured due to accident including Fire, theft etc in addition toThird Party Liability for bodily injury and/ or death and Third Party Property Damage. In case of anaccident, an own damage cover in your motor insurance policy compensates you for expenses incurred torepair /replace parts damaged in the road accident

2. Third Party Insurance (TP)

New

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The IDV of accessories, if any, fitted to the vehicle but not included in the manufacturer’s listed selling price of the vehicle needs to be insured separately. The purchase price of the accessories duly depreciatedfor age will be the IDV for such accessories.

6. Compulsory Deductibles

In case of a claim made by you for accidental damage to your car, You, as a car owner, are expected to bear a small part of the loss and this amount is termed as Compulsory Deductible. This also prevents the

owner of the car from preferring very small claims and sometimes frivolous claims. It is usually fixed onthe cubic capacity of the vehicle insured and ranges between Rs 1,000 and Rs 2,000.

7. Voluntary Excess

When you purchase a car insurance policy, you can opt to co- pay a part of the final claim amount payable to you, after deduction of the compulsory deductible mentioned above. If you opt for this, youare eligible for a discount on your ‘Own Damage’ premium.

For instance, if the liability of an insurance company works out to Rs 10,000, and the Compulsorydeductible is Rs 1,000, the customer will be eligible to get Rs 9000 towards that claim. If the customer 

opts for a Voluntary deductible of Rs 2500, the net amount he/she will be eligible for will be Rs 6,500.

By opting for this voluntary deductible of Rs 2,500/- the customer will be offered a discount upto Rs 750

The voluntary deductibles come in six slabs ranging between Rs 1,500 and Rs 15,000 and customer willenjoy a maximum discount upto 2,500 (depending upon the value of the vehicle and own damage

 premium)

8. NCB (No Claim Bonus)

It is a benefit given to a customer, at the renewal of a policy, if the customer has not made any ‘Own

Damage’ claim in the expiring policy. The NCB is denoted in % and is applied on the ‘Own Damage’ premium of the policy and ranges between 20% and 50% depending upon the number of ‘Claim Free’year record of the customer. You will pay significantly lower premium in case you enjoy higher slabs of 

 NCB.

9. Anti-Theft Device

An anti-theft device, is a device that reduces the chances of your vehicle from being stolen. Purchasing acar with such a device installed in your vehicle would be a step in the right direction and insurersconsider this as a good risk and reward these owners by offering a discount on the premium.

10. Endorsement

If there is any change to be made in your insurance policy, it can be made by way of an endorsement.These changes may arise due to additions to your car like a music system or any inclusion of financier’sname where the vehicle is Hypothecated or change in ownership due to sale of vehicle. All these andother changes to a policy can be made by way of an endorsement.

11. Cashless Garage

 Normally, a customer has to get the car repaired, pay for such repairs and get the eligible amountreimbursed by an Insurer. Under a cashless claim, after completion of accidental repair at company’s

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 preferred garage, Insurance company will make payment of their share of the loss directly to the garage.The customer will have to pay just the excess mentioned in the policy and towards the depreciation of 

 parts.

12. Break in Insurance

If you forget to renew your Car insurance in time and allow the policy to lapse, it results in ‘Break inInsurance’. Insurance Renewal of such vehicle will be done post vehicle inspection and payment of 

 premium. The insurance cover will commence post this inspection and payment of premium.

Additional Covers:

The private car Comprehensive policy covers additional risks/ contingencies and these can be availed on payment of additional premium.

13. Personal Accident Cover

While the owner/insured gets a Personal Accident cover as part of the comprehensive policy, there is anoption to avail PA cover for your driver and other passengers who might travel in your car, upto a sum

insured of Rs 2 lacs per person.

Add on covers:

It is an optional extension of your car’s comprehensive Insurance Policy. Add-on’s are additional benefits and coverage options available to you on paying additional premium. Depreciation waiver , Noclaim Bonus Protector, Engine Protector and Return to Invoice are a few popular add on covers availablein the Indian market.

14. Windshield Cover

If the Windscreen glass (front and / or rear) of the insured vehicle accidentally breaks and needs to berepaired / replaced, an Insurance Company allows such repair / replacement without No Claim Bonusgetting affected. This will not be treated as ‘own damage’ claim and will not affect your No claim Bonusnext year 

15. Loss of Baggage Clause

If the Baggage carried in your car gets stolen or if it gets damaged in a road accident, the Insurancecompany covers such losses if this add on cover is opted for.

16. Depreciation Waiver Clause

 Normally, when a car meets with an accident and if some parts are to be replaced, the InsuranceCompany deducts an amount on such parts towards depreciation. If you avail the Depreciation waiver cover, the Insurer will not deduct this depreciation and you will be entitled to the full price of the partsreplaced.

17. Facilities in lieu of Spare Car Clause

In the unfortunate even of accident where your car is undergoing repairs, you will be severelyconstrained in your movement. To overcome this difficulty, this add on cover offers you a fixed dailymonetary compensation that will enable you to hire a vehicle or make alternate transport arrangements.

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18. Full Invoice Price Insurance Clause

In case of a Total Loss to a Car or in case of Theft of the car, the Insurance company will compensate theowner with the insured value of the car. This insured value (IDV) is the depreciated value and will notreflect the current price of a new car. If the customer plans to buy a new car, he/she will have to makearrangements for the difference between the price of a new car and the amount of claim settled by theInsurer. By opting for this add-on cover, the vehicle is insured for its replacement price and in case of atotal loss or theft, the customer will be getting the full value that the car was insured for.

19. Roadside Assistance

If you are stranded on the road, Road side assistance cover offers you emergency Mechanical andelectrical services apart from facilities like arranging alternate transport, towing, arranging for hotelaccommodation, ambulance services, changing a flat tire or unlocking your car if you accidentally leaveyour keys inside etc.

 Now that you are familiar with some of the important jargon, it is time to research the various types of vehicle insurance policies available and make an informed decision by clearly understanding the cover and the terms and conditions.

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Royal Sundaram Alliance Insurance Company Ltd. AllRights Reserved.Insurance is the subject matter of solicitation.IRDA Registration NO : 102 .Granted on October 23,2000.

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Less weight means better mileage. Storeluggage/ cargo in the trunk rather than on the

roof to reduce air drag.