What You Need to Know About These 10 Important Car Insurance Terms

Category: Business

A common issue faced by customers who want to buy insurance is understanding insurance terms and technical jargon used by insurers. While the terminology may seem confusing, one can easily understand most of the important terms by reading about them online. Read further to learn about some common phrases and words you need to be aware of while buying car insurance 1. Premium: The premium is the amount you pay to the insurance company for your coverage. It's usually paid on a monthly, semi-annual, or annual basis. The cost of your premium is influenced by various factors, including your driving history, age, location, type of coverage, and the make and model of your vehicle. 2.Third-Party Insurance Third-party insurance is a basic policy that is mandatory for all car owners by law. This policy compensates the third party for accidental injury, death, or property damage. This policy is also known as “act only” policy or “liability only” insurance since it does not provide cover to own damages of the policyholder 3.Comprehensive Coverage: It covers damage to your car from non-collision incidents like theft, vandalism, or natural disasters. 4. Property Damage Liability: If you damage someone else's property (like their car or a fence) in an accident, this coverage helps pay for the repair or replacement costs. 5. Claim: A claim is a formal request you make to your insurance company to cover the cost of damages or losses covered by your policy. This could include repairing your car after an accident or reimbursing you for stolen items. 6. Premiums vs. Deductibles: Premiums and deductibles are inversely related. A lower deductible often means a higher premium and vice versa. Choosing the right balance between them depends on your financial situation and risk tolerance. 7. Declarations Page: This is a summary of your insurance policy that includes essential information like the types of coverage you have, the vehicles covered, the policy period, and the premium amounts. 8.Network Garages: When an insured car needs to be repaired, the policyholder can raise a claim. Some insurance companies offer a cashless claim process where they directly settle the bill with the garage. Insurance companies offer this service only in some garages, known as “network garages” and if one wants a cashless claim process, they can approach a network garage 9.Add-On Covers: Additional covers/riders are also known as add-on covers. There is a wide range of covers that policyholders can choose to enhance their motor insurance. This can be availed by paying an added premium 10. No Claim Bonus No Claim Bonus is a discount offered to policyholders who do not make any claim during a policy tenure. This discount increases every policy tenure, and it starts at 20% and can go up to 50% There are several insurance related phrases that one must understand before buying an insurance policy. These days one can access all this information on the official website of their insurance company. To learn in detail about car insurance policies, click here! Understanding these car insurance terms can empower you to select the right coverage for your needs and budget. When discussing your policy with an insurance agent, make sure you're well-informed about these terms so you can make the best decisions for your financial security on the road.