Motor insurance can leave you confused with new terms and words. Generally, such words are known as jargon – which is complex to understand. So, before buying motor insurance, you must understand the complex words you will encounter.
Motor Insurance Terminologies You Must Know
Below are the different types of jargon used in a motor insurance policy –
- Premium: The motor insurance premium is the amount you pay for the policy you have bought for your bike or car. The premium is payable monthly, quarterly, yearly, or bi-yearly. It is the decided amount that you pay to the motor insurance provider in exchange for several coverages. The premium amount depends on multiple factors such as – your age, location, make and model of the vehicle, year of purchase, etc. It also varies with the optional covers you purchase for extensive coverage.
- No Claim Bonus: No Claim Bonus, or NCB, is the discount the insurance provider offers you at the time of policy renewal. This discount is offered when you do not raise any claim throughout the policy tenure. The discount is cumulative and increases with each passing claim-free year. The discount works as a motivation to drive safely to avoid any accident, which might lead to the situation raising claims.
- Third-Party Insurance: A third-party motor insurance policy is mandatory basic insurance you must have while driving in India. This was mandated by the Motor Vehicle Act of 1988. It covers financial and legal liabilities incurred due to vehicle, life, or property damage. Though it saves you from any liabilities, it does not cover damages to your vehicle. Also, if you do not possess third-party motor insurance, you might either be fined or jailed as per state law.
- Own Damage Cover: Own Damage Cover, also known as OD, is a type of motor insurance plan that helps you protect your bike from costs incurred due to damage to your bike caused due to natural calamities, accidents, riots, etc. It also protects your motor vehicle from theft or total loss.
- Comprehensive Insurance: As the name suggests, the comprehensive motor insurance policy protects you from all adversities on the road. In addition to protecting, you from any third-party liabilities, it also protects you from damage caused to your bike. One of the best parts of a comprehensive motor plan is that you can customise the plan as per your need with riders to gain extensive coverage benefits.
- Riders: Riders are also known as add-ons. These are the additional insurance coverage from particular losses or damages. The add-ons can be bought only with comprehensive bike insurance. You will find several add-ons while purchasing or renewing motor insurance Some are zero depreciation coverage, roadside assistance coverage, engine protection cover, and many more.
- Liability: The term legal liability is used when you are responsible for third-party damage to the vehicle, property, or life. If you have motor insurance, the insurance provider takes care of legal liabilities.
- Network Garage: A network garage is any garage mentioned in the motor insurance Network garages help you avail the benefit of cashless reimbursement. In this, you can visit the network garage and get your bike repaired, and the claim will be settled between the insurer and the garage.
- Grace Period: Motor insurance has a validity of 1,2 or 3 years, and after the completion of a particular year, the policy expires. This happens when you do not renew it on time. However, after the policy expires, some insurance providers allow you to renew the policy within 30 days without inspection. This is called a grace period, which depends may vary based on the insurer’s terms and conditions.
Having robust motor insurance before you hit the road is very important. However, you must understand the terms used in insurance. This will make your purchase easier, and you can make a sound decision. Make sure you read your policy document properly and understand all the terms before making the purchase.