4 terms in your car insurance cover

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Car Insurance

• 4 terms in your car insurance cover

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When you buy a car, you also need to insure it
and what you typically end up buying is a
comprehensive car insurance cover. But to
understand your policy, you need to read through
the jargon and know what it means. We pull out
four terms that you need to understand.
THIRD PARTY AND OWN DAMAGE COVER A third-party
car insurance cover is mandatory before you can
take your car out of the showroom. It covers
damage to life or property of a third party by
the insured vehicle.
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• The premium of the third party component is fixed
  by the regulator and the sum insured or liability
  is unlimited in case of an accident that causes
  bodily injury or loss of life.
• The amount of claim paid by the insurer is
  decided by taking into consideration the earning
  capacity and age of the injured or deceased
  person. In case of damage to property, the
  maximum liability can be Rs.7.5 lakh.
• Own damage (OD) cover, on the other hand, insures
  your vehicles against theft or damage. Your
  comprehensive cover will also include personal
  accident insurance covers for owner and driver.

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INSURED DECLARED VALUE Unlike third-party cover,
the premium in the case of OD cover is decided by
the insured declared value (IDV) of the vehicle.
IDV is the value that the insurer will pay if
your car is completely damaged or stolen. In that
sense, IDV is the sum insured and is calculated
based on the invoice of your car minus
depreciation. In the first year itself, the
value of your car depreciates by 5. Every year,
the insurer will calculate the premium on the
IDV. Depreciation also applies to certain body
parts such as those made of rubber and plastic.
Buy add-on covers to make sure that at the time
of claim the policy doesnt pay the depreciated
value but full replacement value.
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DEDUCTIBLE This is another significant term that
you should know. A deductible is that amount of
the claim that needs to be borne by the person
who buys the cover. For example, for a 1500cc
vehicle, the deductible is Rs.1,000. This means
that any claim worth Rs.1,000 will not be
entertained. For a bigger claim, you will still
need to pay the first Rs.1,000. You can choose
a higher deductible to bring your premium down,
but that might be a mistake because in case you
make a claim, you will end up paying a higher
amount.
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• NO-CLAIM BONUS
• A no-claim bonus is the discount that you get on
  your premiums for each year that you dont make a
  claim. This bonus is applicable on the premiums
  that apply for the OD cover.
• So, every year, when you renew your policy, you
  get a discountthe maximum discount over a period
  of time is usually capped at 50on the premium.
• Also, when you buy a new car, you can transfer
  the no-claim bonus from your old car to the new
  one.

Thank You .!
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• To Know more details on Car Insurance
• http//www.bajajallianz.com/Corp/motor-insurance/
  car-insurance.jsp

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