Understanding motor insurance terminology is essential for navigating your policy and making informed decisions. Here are some key terms you should know:
1. Insured Declared Value (IDV)
IDV is the maximum sum assured that an insurer will pay in case of total loss or theft of your vehicle. It represents the current market value of the vehicle, accounting for depreciation. Knowing the IDV is crucial for ensuring you have adequate coverage.
2. No Claim Bonus (NCB)
NCB is a discount on your premium for each claim-free year of your policy. It rewards safe driving and can significantly reduce your renewal premium. Typically, NCB accumulates over the years and can be transferred if you switch insurers.
3. Deductibles
Deductibles refer to the amount you are required to pay out-of-pocket before your insurance coverage kicks in during a claim. There are two types of deductibles:
Voluntary Deductible: The amount you choose to pay voluntarily to lower your premium.
Mandatory Deductible: The amount set by the insurer that you must pay for every claim.
4. Premium
The premium is the amount you pay for your motor insurance policy, usually on a yearly or monthly basis. It is influenced by various factors, including:
Vehicle Make and Model: Higher value and more expensive vehicles typically have higher premiums.
Coverage Type: Comprehensive policies generally have higher premiums than third-party policies.
Driving History: A clean driving record can lower your premium.
5. Coverage
Coverage refers to the specific protections provided by your insurance policy. Common types include:
Liability Coverage: Protects against damages to third parties.
Collision Coverage: Covers damages to your vehicle from accidents.
Comprehensive Coverage: Includes both collision and non-collision events.
6. Policy Exclusions
Policy exclusions are specific conditions or circumstances that are not covered by your insurance policy. Common exclusions may include:
Driving Under the Influence: Claims made while driving under the influence of drugs or alcohol may be denied.
Unlicensed Drivers: Coverage may not apply if the driver does not have a valid license.
7. Renewal
Renewal refers to the process of extending your insurance policy after its expiration. It’s essential to review your coverage options, premiums, and any applicable NCB before renewing to ensure you continue to have the right protection.
8. Claim Process
The claim process involves notifying your insurer about an incident for which you are seeking compensation. Steps typically include:
Filing a Claim: Submit necessary documents and details about the incident.
Claim Assessment: The insurer assesses the claim and determines the compensation amount.
Settlement: Once approved, the insurer pays the compensation according to the terms of your policy.
Conclusion
Familiarizing yourself with these key motor insurance terms can help you make better choices regarding your coverage. Understanding concepts like IDV, NCB, deductibles, and premiums is vital for ensuring you select a policy that meets your needs and protects your financial interests on the road.