Car Insurance- also known as motor or vehicle insurance, provides financial protection to you and your four-wheeler against any loss or damage that results from unforeseen incidences. These include accidents, fire, natural calamities, theft, injury to third-party persons, or damage to property. Additionally, it also provides personal accident cover to the car’s owner-driver. In India, it is mandatory to insure your vehicle for a third party when buying it and renew it every year. However, if you are new to car insurance and want to know more about the terminologies, this article has you covered.

Here are some car insurance terminologies for your knowledge

Bumper-to-bumper cover 

It refers to the warranty your insurance company provides, assuring that everything that falls between the rear and front is financially cover against any damage. 

Breakdown assistance

An add-on for your car insurance policy, breakdown assistance from your insurance company, allows policyholders to ask for help during a car’s breakdown that might have cause you to be strand. Add-ons are additional coverage that a policyholder can choose to include in their car insurance policy at the time of its purchase. However, this may increase your premium payable to the insurance provider. 

Consumable cover

This cover refers to the financial coverage provid on a car’s engine oil, grease, nuts and bolts, etc., in case of an accident.

Consequential damage

Not all damages directly result from an accident, and such damages are known as consequential damage. However, most insurance companies don’t cover this.

Contributory negligence

It refers to your negligence towards the essential safety measures and instructions of the car’s manufacturer that might cause damage to the insure vehicle. 

Depreciation 

A car is a depreciating asset, and depreciation in your car insurance policy refers to the depreciation in the actual value of your vehicle. Your vehicle’s depreciation value is calculat if your car suffers irreparable damage or is subject to theft, causing a total loss. It involves considering the years your car has been use, the distance it has been driven, and its overall condition. 

Loss or damage 

It refers to the damage cause to your car due to an accident. Most car insurance policies cover incidents such as fire, collision, vandalism, natural calamities, or intentional harm by third parties.  

Effective date

The effective date refers to a car’s insurance policy when it becomes operational.

Exclusion

Objects or situations that do not qualify for coverage under an insurance policy are considere an exclusion. Circumstances such as drunk driving are exclude from car insurance policies, and the policy doesn’t financially cover any damages arising from such incidences.

Endorsement 

It is a document that illustrates the addition or removal of a benefit to or from an existing insurance policy. 

Insured Declared Value

Also referred to as IDV, the Insured Declare Value refers to the optimum amount that an insurance company provides as the total insured upon incidences where the car suffers total loss or damage. It is calculatd by deducting the depreciation value of a car from its listed price as earmarke by the vehicle’s manufacturer. Depending on the accessories installed by the car owner separately after its purchase, the IDV is then calculate separately and added to the car’s IDV. 

Lapse

Failure to renew the car insurance policy before either due date can lead to a lapse of the policy. Moreover, such policyholders may lose their No Claim Bonus. 

Motor Vehicle Record

MVR or the Motor Vehicle Record illustrates the driving history of the car insurance policyholder. This document contains all the details of the concerne individual’s traffic history, such as any/ all traffic violations, fine payments, or special notes on their driving license. 

Passenger Cover

This coverage comes as an add-on that covers the require medical expenses on account of physical injuries sustain by a passenger in an insured vehicle. 

3rd Party Car Insurance

Third-party coverage is a form of an insurance contract where the policyholder is insured against losses. Arising from the liability to compensate a third party due to bodily injuries or property damage done to them by your car. This form of coverage is also known as liability coverage. Under the Motor Vehicles Act, the 3rd party car insurance coverage is mandatory in India. 

Tyre protect cover

It refers to an additional coverage that enables the car policyholder to receive. Compensation for losses suffered on account of tyre damage. However, any intentional damage to tyres is exclude from such benefits. 

Zero Depreciation Cover 

With a zero depreciation cover, you can claim the total cost of replacing car parts in the incidence of accidental damage caused to the car. In that case, the depreciation value of the damage parts is not deduct from the claim amount. enabling you to save a significant amount of money. 

Being well-versed with your car insurance policy will help you seek the require coverage in times of need.