TOP 5 TERMS USED IN A CAR INSURANCE POLICY

In India, one in every 12 households owns a car. Whenever we think of investing in vehicles, cars stand out from the rest as they lend themselves to a whole hoard of exciting aspects like luxury, comfort and also a symbol of pride. While one might be excited at the prospect of bringing home a four-wheeler, there are certain add-ons that are necessary instruments as mandated by law.

According to the Motor Vehicles Act of 1988, it is mandatory for car-owning citizens of India to invest in a third-party car insurance policy for their vehicles. Car insurance, otherwise known as motor insurance, provides financial security to the owner to protect themselves against incidents of road accidents and damages owing to natural calamities.

A Car Insurance policy is offered in three different categories namely:

• Third-party insurance
• Own-damage insurance
• Comprehensive insurance

As complicated as it seems, car insurance policies are pretty straightforward and direct once you understand the key terms associated with it. In this article, we shall delve deep into some of the important terminologies that you need to know when you are contemplating purchasing a car insurance policy for your vehicle.

1. First, the second and third party in a car insurance policy

The first party refers to the insured or the policyholder of the car insurance policy. This person would be the primary owner of the vehicle. The second party refers to the insurer or the organisation with whom the vehicle was insured.

Ex: If an individual has insured his car with a Chola MS car insurance policy, our organisation would be referred to as the second party

Third-party refers to any other individual to whom the policyholder might be liable to pay for damages.

Ex: If the policyholder accidentally injures a pedestrian or another vehicle while driving, he/she might be liable to pay for the damages of the third party.

2. Insured Declared Value (IDV) or Sum Assured

The Insured Declared Value is the maximum claim that the insurance organisation will pay the policyholder during the event of total and irrevocable damage to the vehicle. Claiming the IDV would entail events or scenarios where the vehicle is lost due to theft or natural calamities or when there is irrevocable damage to the vehicle owing to an accident.

This amount is usually calculated by the Insurance company by applying a certain depreciation percentage to the selling price of the car.

3. Third-Party Liability Coverage

Third-party liability coverage is a four-wheeler insurance policy that works to protect the insured against third-party financial liabilities. This is a legal requirement for individuals driving four-wheelers in India. A third party coverage typically offers coverage for the injuries and sometimes even the death of a third party who was affected by the insured vehicle. It also covers property damage to a certain limit. Chola MS car insurance policies have an extensive list of claim options that can be covered using third-party liability coverage.

4. Comprehensive Coverage

Chola MS car insurance policies are well-equipped to offer comprehensive coverage options for policyholders. This coverage option is not mandatory, but it would make for a stellar add-on to an existing policy as this insures the policyholder against a whole range of damages, including that induced by third parties. It offers coverage on an extensive list of damages, right from small road accidents to a whole range of theft or natural calamity. Any car insurance policy would have comprehensive coverage as an add-on option to their existing policy.

5. DEDUCTIBLES

Deductibles in a car insurance policy refer to the sum of the amount that would be paid by the policyholder during a claim settlement. Deductibles are further classified into two:

• Compulsory deductible
• Voluntary deductible

Compulsory deductibles refer to an agreed-upon amount that is calculated at the time of registering a policy. This is a mandatory amount that needs to be paid by the policyholder at the time of a claim settlement.

A voluntary deductible is an amount that the policyholder can agree to pay based on his own volition at the time of settlement. This sum of money will be over and above the compulsory deductible. Some individuals choose to exercise this option as it considerably reduces the premium amount of the policy at the time of renewal. But one can always choose to apply for the voluntary deductible option as well!

These are some of the key terminologies that you need to know if you are contemplating going in for a car insurance policy for your four-wheeler.

Chola MS car insurance policies act as effective instruments that one can choose to combat and move through events of difficult circumstances like loss or damage to your four-wheeler. With a wide range of creative and also cost-effective add-ons to choose from, these policies are all that you need to ensure that you secure yourself from unforeseen damages.

Link 1: https://pixabay.com/photos/crash-test-collision-1620592/

Link 2: https://pixabay.com/illustrations/car-accident-car-crash-car-accident-1995852/