Here are some common motor insurance terms you must know before claim:

Insured declared value

Insured Declared Value or IDV is the current market value of your vehicle. IDV refers to the maximum sum payable fixed by the insurer for a vehicle insurance policy. It is the maximum amount you can claim in case of total loss of your vehicle. The registration and insurance cost are excluded from IDV.

Travel Medical Insurance

IDV is generally calculated based on the age of the vehicle as well as the rate of depreciation. In the first year itself, the value of your car depreciates by about 5%. So every year, the insurer will calculate the premium based on the IDV of the vehicle that reduces every year.

Insured Declared Value = (Company’s listed price – the depreciation value) + (Cost of vehicle accessories - the depreciation value of these parts)

No claim bonus

No claim bonus (NCB), as the name suggests, is a discount offered by the insurer to the policyholder for not making any claims in the previous policy year. A policyholder is eligible for a 20% discount in the first claim free year and the discount can go up to a maximum of 50% over a span of 5 year.

Third party insurance cover

Third-party offers coverage against any financial liability as a result of death; physical injury or damages and losses incurred by a driver who is not insured, the principal and is therefore not covered under the insurance policy. There are two main categories of third-party insurance i.e., liability coverage and property damage coverage. Third party cover is the minimum level of coverage mandated by the law in India.

Personal accident insurance cover

Personal accident insurance cover provides coverage against an unfortunate event causing bodily injuries, permanent disability, and even death in case of an accident. It is advisable to make sure your insurer provides personal accident coverage.

Cashless claim

Cashless claim is when the policyholder does not have to pay for any repairing damages or treating injuries. It is important to note that cashless claims are not 100% cashless. The policyholder needs to pay a small part of the claim amount for the repairs made, in the form of deductibles and depreciation.

Own damage cover

An own damage premium covers the damages on your car while you are on the road. It insures your vehicle against damages and losses caused by events outside of your control such as, natural disasters like earthquakes and tornadoes, as well as man-made calamities like fires and explosions etc. In case of an accident, an own damage cover compensates policyholder for expenses to repair or replace parts of the car damaged in an unfortunate event.

Zero depreciation cover

Depreciation refers to loss in car's value due to factors such as age, wear & tear etc. Standard motor insurance policies deduct depreciation on replaced parts at the time of insurance claim. If you opt for a zero depreciation cover, your insurer waived of depreciation on the car parts that have to be repaired or replaced, which means the policyholder receives the complete insured amount without deducting the amount of depreciation at the time of claim. A zero depreciation cover is one of the most popular addon covers among luxury car owners.

When you’re buying or renewing the motor insurance, keep these common motor insurance terms in your mind.