Car insurance is indispensable and is something that you absolutely need if you own a car. With the different kind of insurance policies that you can buy and kind of coverage that you get, there arise a lot of things worth knowing about insurance in general. What are they? We take a look at five such must-know facts!
Car Insurance coverage types
A lot of people do not know about the fact that there are two types of coverage that you can opt while purchasing insurance – Comprehensive or Third party cover.
It’s a contract
It’s a contract between you and the insurance company. A comprehensive cover shields you against the damages that you might do to your own car in addition to the third party cover which is an integral part of comprehensive policy. A third party cover is a mandatory and minimum policy coverage that you must get. It covers damage against pedestrians, passengers of other cars and damage that you might do to another car.
No Claim Bonus
It’s a discount that you earn if you maintain a claim-free year. The discount percentage increases every successive year and can go up to 50% from 20% in five years.
IDV (Insured Declared Value)
The market value of your car is called IDV. If your car get stolen or gets damaged beyond repair, it’s the maximum amount that your car company will reimburse you. Since the car depreciates each year, the IDV value also decreases.
The claim amount for third party coverage is decided by IRDA (Insurance Regulatory Development Authority) based on engine capacity and other factors. While the premium that you would need to pay for coverage of own damages is decided by insurance companies.