Car Insurance Terms

Car Insurance Terms

Car insurance is a crucial aspect of owning and driving a car in India. It is mandatory by law to have at least third-party liability insurance for all vehicles on Indian roads. However, understanding the different types of car insurance policies and their terms can be challenging, especially for those who are new to driving or purchasing car insurance. In this article, we will go over some of the general car insurance terms in India that you should be familiar with to help you better understand your policy.

1) Third-party Liability Insurance

This is the most basic and mandatory type of car insurance policy in India. It covers the cost of damage caused to third-party property or injuries in an accident caused by the insured vehicle. However, it does not cover the damage to the insured vehicle.

2) Comprehensive Insurance

This is a more comprehensive policy that covers the cost of damage caused to the insured vehicle as well as third-party property or injuries. It also covers damages caused due to natural calamities such as floods, earthquakes, etc., and theft.

3) Insured Declared Value

Insured Declared Value (IDV) is the maximum amount that an insurance company will pay in case of total loss or theft of the insured vehicle. It is calculated as the current market value of the vehicle minus depreciation.

4) Deductible

A deductible is the amount that the insured has to pay from their pocket at the time of filing a claim. It is usually a percentage of the IDV and varies according to the policy.

5) No Claim Bonus (NCB)

NCB is a discount that is offered on the premium amount for every claim-free year. It starts from 20% for the first year and can go up to 50% for the fifth consecutive claim-free year.

6) Add-ons

Add-ons or riders are additional benefits that can be purchased along with the basic policy to enhance the coverage. Some popular add-ons in India include zero depreciation cover, engine protection cover, and roadside assistance.


Understanding the different terms of car insurance policies in India can help you make an informed decision while purchasing insurance. Always compare different policies and understand the inclusions and exclusions before selecting a policy that best suits your needs. Remember, car insurance is not just mandatory, but also necessary to protect yourself and your vehicle from unforeseen circumstances.

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