Availing of a motor insurance plan offers a plethora of benefits. It provides financial protection against bodily injury, death arising due to an accident, third party coverage, as well as damage to the vehicle.

Many individuals, however, do not understand the common jargon associated with aninsurance policy for bike, car, truck or any other vehicle. Gaining knowledge on important motor insurance terms helps you understand your insurance plan well.

Following are the six important auto insurance terms that you should know.

1.  Insured declared value

Insured declared value (IDV) refers toyour vehicle’s current market value. In case of theft or loss of vehicle, your insurance provider is liable to provide an amount equivalent to the IDV of your vehicle. IDV is generally calculated based on the age of the vehicle as well as the rate of depreciation.

2.   No claim bonus

As the name suggests, no claim bonus (NCB) refers to the discount that you may receive from your insurance provider for not making any claims in the previous policy year. NCB, therefore, acts as a reward for safe driving. You may avail of this discount while renewing your insurance policy in the subsequent year.

3.  Third party insurance cover

Third party insurance covers the policyholder’s financial liability for disability or death of the third party, as well as, damage caused to third party property. Third party cover is the minimum level of coverage mandated by the law in India.

4.  Personal accident cover

A personal accident cover provides coverage against an unfortunate event of an accident. Such a policy offers financial protection against repairs to your vehicle, as well as bodily injuries, permanent disability, and even death in case of an accident. It is advisable to secure a personal accident cover as you may have peace of mind knowing that you are covered in the case of a mishap.

5.  Comprehensive policy

A comprehensive motor insurance policy offers overall financial coverage against damages to both the parties involved in an accident. Such a type of insurance plan covers natural disasters such as tornado or hurricane, as well as manmade calamities such as fire or theft. It is important to note that a comprehensive insurance policy covers legal liability to third party, damages to own car, as well as personal accident cover.

6.  Cashless claim

These days, cashless insurance policies are gaining popularity. Under such an arrangement, the insurance provider settles its share of claim directly with the garage. Therefore, you do not have to make large out-of-pocket expenses towards the repair of your vehicle. It is, however, necessary to visit a garage in the insurer’s network in order to avail of the cashless facility.

It is imperative to gain a deep understanding of all the insurance-related terms. You may also read yourvehicle insurance policy details to have a clear picture of the various features and benefits of your plan.