6 Motor Insurance terms you must know before you claim

So many terms and conditions to peruse, so many policy papers to pry apart! If only there was some sort of insurance dictionary you could refer to every time you came across a word or term you didn’t know…

Well, now there is.

We’ve simplified the meanings of a list of common terms you will definitely come across when buying or renewing motor insurance.

1. Insured Declared Value (IDV)

Simply put, IDV is the current market value of your vehicle.

IDV refers to the highest sum payable by the insurer for a vehicle insurance policy.  It is thus the maximum amount you can claim in case of total loss of your vehicle, for instance if it gets stolen or damaged beyond repair.

Tip: Refrain from quoting an IDV lower than the actual market value of your car. Though you may think that would allow you to pay less premium, it may also result in you receiving inadequate compensation.

2. Own Damage Premium

This is the premium you pay to avail insurance cover equal to the IDV, and forms a major part of your total motor insurance premium.

ODP insures your vehicles against losses caused by events outside of your control. This includes natural disasters like earthquakes and tornadoes, as well as man-made calamities like fires and explosions.

3. Zero Depreciation Cover

When you make a claim, standard insurance policies deduct depreciation on replaced parts. However, if you opt for a Zero Depreciation cover, bike insurance companies waive off depreciation on such replaced parts, which means that you get a higher claim amount.

4. No Claim Bonus (NCB)

This is essentially the discount you become eligible for when you have not made a claim in the previous year- kind of like a reward for prudent use of your vehicle.

5. Third Party Cover

Third Party cover protects the vehicle owner against any financial liability as a result of death, physical injury or damage to the property of a third party.

6. Personal Accident Cover

Beyond just your vehicle, Personal Accident Cover financially safeguards you against unforeseen events causing bodily harm, such as Accidental Death or Permanent Total Disability arising due to a road accident.

[Source: https://www.tomorrowmakers.com/articles/car-insurance/6-motor-insurance-terms-you-must-know-before-you-claim]