Finance

Understand the Technical Terms Used in Bike Insurance

Buying insurance is a daunting task. With a plethora of insurance companies with different policies, it gets increasingly challenging to select the right insurance policy. To add to it, these jargons are industry-specific. These jargons tend to overcomplicate the already confusing process. Thus, it is essential you are aware of the different terms used while buying bike insurance.

They may be tricky at first, but once you understand them, making a choice will be easy as never before. Be it a third-party cover or a comprehensive one, these terms are commonly used across all insurers. Here are some common two wheeler insurance jargons that will simplify your insurance purchase decisions.

Cover: Cover is the term used to denote the liability of the insurance company. It is the maximum amount that the insurer shall bear when the claim occurs. The amount of your insurance cover varies depending on the premium charged for your policy.

First-party: First-party is the policyholder or the insured individual by the insurance company.

Second-party: Second-party is the insurance company who assumes the liability from the applicant in return for a premium.

Third-party: In two wheeler insurance third partyis the person or property that is involved in the accident or injury caused by the policyholder or first party.

Premium: Premium is an amount determined based on multiple factors. These factors include the cost of the vehicle, the engine capacity, fuel type and so on. These factors are crucial in determining the fee to be charged by the insurance company from the applicant to cover the risk. Premiums for liability only cover are governed by its regulator, the Insurance Regulatory and Development Authority of India (IRDAI). Whereas for a comprehensive policy, it is based on the different coverage options available to the insurer.

Third-party policy: Third party insurance for bike is also known as liability only insurance. It offers protection against legal as well as financial liabilities from an accident involving injury or damages to a third-party person or property. It is mandatory and a compulsory regulatory requirement as per the Motor Vehicles Act, 1988.

Comprehensive policy: A comprehensive insurance policy extends the benefits of third-party, coverage for natural disasters, man-made calamities to the policyholder or the driver of the vehicle. Moreover, you can increase the coverage of your comprehensive policy using add-on covers.

Exclusion: Any event expressly excluded from your policy coverage is termed as an exclusion. These exclusions are either permanently excluded or can be included under the policy coverage by using add-on covers for comprehensive policies.

Insured Declared Value (IDV): IDV is the maximum amount payable in case of total loss or theft of your vehicle. The applicant can fix this amount in case of comprehensive insurance policies. The IDV of your vehicle is approximately equal to its current market value.

Zero Depreciation Cover: An add-on cover that does not account for depreciation when an insurance claim is made. It helps the insured receive a higher amount of reimbursement, as opposed to the depreciated value, when an application for a claim is filed.

No Claim Bonus (NCB): Applicable for each policy year when no claims are filed by the insured. In such cases, the insurance company provides a bonus to the policyholder for every claim-free policy-year. The NCB helps reduce the premium at the time of two wheeler insurance renewal. The percentage of NCB starts at 20% and goes up to 50% for every consecutive policy-year without claims.

So the next time you are looking out for a renewing or buying a two-wheeler insurance plan, make sure to read the fine print. Here you will understand the terms of the policy, which will help you in finalising on a suitable two-wheeler insurance plan.

What is your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Comments are closed.

More in:Finance