As we all know, having car insurance is mandatory in India. It covers several financial losses in the event of an accident, theft, or natural disaster. However, when it comes to purchasing car insurance, most car owners find common car insurance terms confusing.
With that in mind, we are going to explain 5 important car insurance terms to help you make an informed car insurance purchase.
5 Essential Car Insurance Terms Simplified
Purchasing a car insurance policy can be challenging if you don’t know the right meaning of all the terms. Let’s understand 5 common car insurance terms.
1. Car Insurance Premium
It is a cost to pay to your insurance company to keep your car insurance active. You can select the installment period at your convenience.
Car insurance premium depends on a few things, such as the type of car you have, your driving history, your location, etc.
Generally, third-party car insurance comes at a lower premium than a comprehensive car policy. This is mainly due to its limited coverage compared to a comprehensive plan. Keeping a good driving record can also help you save money on your car insurance.
2. Car Insurance Deductible
A deductible is an amount you agree to pay out of pocket before your insurance company covers the rest of a claim. For instance, if your deductible amount is ₹500 and the repair costs for your car are ₹2,000, you will pay ₹500, and your insurance will cover the remaining ₹1,500.
The deductible amount is usually based on the car’s engine cubic capacity. There are two main types of deductibles- compulsory and voluntary.
Choosing a higher amount of deductible can lower your car premium costs, but it also means more out-of-pocket expenses during a claim. You can choose a suitable option while purchasing the policy.
3. Liability Coverage
Let’s assume you accidentally damage another’s car or injure others. Liability coverage pays for those damages and injuries. There are two main types of liability coverages:
Bodily Injury Liability: This helps cover medical expenses and legal fees for injuries you cause to someone.
Property Damage Liability: If you damage someone’s property, like their car or compound wall, in an accident, it will be covered based on your policy terms.
If you have third-party car insurance, it covers any legal or financial expenses that arise out of an accident. Usually, carrying liability coverage is mandatory. It protects you from losses in case a lawsuit is filed. It also allows you to support the people affected by an accident caused by you financially.
4. Comprehensive Coverage
As the name suggests, comprehensive coverage helps you cover financial losses arising from a third-party liability as well as damages incurred to your insured car. In this way, it offers an all-round financial protection.
Though this coverage is optional, it is highly recommended if you have a brand-new, high-value luxury car. Even a small dent in such cars costs a fortune. Make sure you ask doubts to your insurance company for better clarity. Moreover, always purchase insurance for a four-wheeler from a trusted company like Tata AIG.
5. Claim
As per the standard process, the insurance holder can officially request payment to cover losses. This formal request is called a claim. Once a claim is filed, the insurer will assess the damage and analyse whether the incident is covered under your policy. If the losses are to be covered by the insurer, it will calculate the amount and proceed with the payment.
To file a claim, you need to provide complete information to your insurance company to help them assess the accident. This includes the date, time, place, and details of what happened. If you follow timeliness and honesty in the claiming process, you could get the payment faster.
Conclusion
Once you understand these basic car insurance terms, you can easily select the best car insurance policy for your vehicle. You can select the right coverage for your needs and budget, ensuring that you and your car are well-protected on the road.
When selecting insurance, always read the fine print and ask questions if something is not clear. Remember, a well-informed decision is the best defence against unexpected financial hurdles.
