Why Do You Need Motor Insurance?
Motor insurance, as the name suggests is an insurance cover for the motor vehicle owned by a person. Owning a four-wheeler is an important landmark in one’s life. A personal car gives a sense of pride and a sense of achievement. On the other hand, owning a commercial vehicle enables revenue generation.
We come across advertisements from vehicle manufacturers about their new models with the newest safety features. Even the government tends to introduce newer mandates for incorporating safety features from time-to-time.
However, the main question remains – can safety features mitigate all the risks while driving a vehicle on the road? Why just driving risks, even a stationary vehicle carries the risk of damage.
This is why it is very important for a motor vehicle is insured. Motor insurance mitigates the risk of loss of vehicle due to unforeseen circumstances like theft; damage while in use; and damage while being stationary (for example, a tree-falling on it).
Though the emotional loss is irrecoverable, the financial loss is covered by the motor Insurance cover. Also, motor insurance is mandatory in India and rightly so.
What is a Motor Insurance Policy
You should go through the below constituents of the policy in order to ascertain whether it gives the right coverage at an optimum price:
- Insured Declared Value: IDV is the current market value of the vehicle. This is one of the most commonly used insurance terms and is referred to in case of claims. IDV refers to the highest sum payable by the insurer under a vehicle insurance policy. It is thus the maximum amount one can claim in case of total loss of one’s vehicle (for instance if it gets stolen or damaged beyond repair). There is a tendency of quoting a reduced IDV in order to cut down on premium amount. This may result in the claimant receiving inadequate compensation in the unfortunate circumstances of raising a claim.
- Self-Damage premium: In simple terms, this is the premium amount to be availed of in an insurance cover. It insures the vehicle against losses caused by events outside one’s control.
- Third Party cover: According to the Indian Law, third party cover is mandatory when one is buying a vehicle. This cover protects the vehicle owner against any financial liability towards a third party. A victim can file a claim against the owner of the vehicle, and the latter’s insurer will pay for this claim on his behalf.
- Zero Depreciation Cover: Standard insurance policies deduct depreciation on replaced parts in case of a claim. If one opts for a Zero Depreciation cover, insurance companies waive-off depreciation on such replaced parts, and it results in a higher claim amount.
- No Claim Bonus: One of the most commonly used vehicle insurance terms, this is essentially the discount one becomes eligible to when no claim is made in the previous year. This discount considerably lowers the insurance premium that you need to pay when you are renewing the policy.