Insurance Terminology
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| Insurance Terminology |
Agent
An agent is either an insurance salesperson or an independent agent who sells policies of one or more insurance companies.
Claim
A claim is a person##Q##s request for payment to an insurance company for a loss covered under a policy.
When a person claims to his insurance company for a loss it is known as a first-party claim. On the other hand when one person makes claim against another person##Q##s insurance company then it is known as a third-party claim.
Collision Coverage
It is an optional insurance that pays for damage to your car caused by any accident involving any other car or object. It also pays in the case the damage is done to the car by rolling over. It may be required in the case you have opted for a car loan.
Comprehensive physical damage coverage
It is yet another optional insurance. It pays for damages to your vehicle caused by anything other than an accident. It may cover damages done due to fire, theft, vandalism or flood.
Conditions
Conditions are the part of an insurance policy that describe your obligations and those of your insurance company in order for the policy to be in effect. You need to fulfill those conditions if you want to make a claim in future.
Deductible
Deductible is the amount of money that you agree to pay in the case of a claim. It is subtracted from the total amount paid by the insurance company. For example if your total claim is $500 and the deductible is $100, then you have to pay $100 and the insurance company will pay the rest $400. Normally when the deductible is higher you may need to pay lower premium. On the other hand if your premium is higher than you may need to pay lower deductible when you file for a claim
Insured##Q##s Declared Value
Insured##Q##s Declared Value (IDV) is a manufacturer##Q##s listed selling price less depreciation. It is basically the depreciated value of the vehicle agreed upon by both the insurer and the policy holder. IDV of a car reduces with age. The premium of insurance is calculated on the basis of IDV of the vehicle.
Insurance company
A insurance company is an organization that agrees to pay for the damages or loss to your vehicle in case of any accident or other reasons in exchange for a fee known as a premium. The insurance policy is signed after mutual agreement between the the insurance company and the vehicle owner.
Liability
A liability is a legally enforceable financial obligation.
Liability coverage
Liability overage is an insurance that pays when you have caused loss to other person unintentionally. It includes physical injury coverage that pays for the cost of medical treatment and legal defense costs in the case your car has caused some physical damage to the person. It also includes property damage liability coverage under which your insurance company pays to a person you have caused any property damage of.
No Claim Bonus
You are offered a No Claim Bonus (NCB) on insurance policy renewals in the case you do not make a claim during the policy period. Insurance companies reward policyholders by giving them a discount on the Own Damage premium up to a maximum of 50% in the case of no claim during the policy. NCB is offered to a policy holder only if the policy is renewed within 90 days of the expiry date of the policy.
Negligence
Your failure to exercise a generally acceptable level of care and caution with regard to your vehicle and driving is considered negligence in terms of insurance policy.
Own Damage Premium
Own Damage (OD) premium is the amount of premium that you pay to the insurance company to cover above the mandatory third-party cover. If you have paid OD premium you are entitled to claim compensation in the case of damage to your vehicle due to flood, fire, earthquake, etc.
Personal Accident Cover
It is insurance coverage for the unnamed person (not the driver) sitting in the car. Under this cover the maximum amount of coverage is Rs 2 lakh for each passenger. It is useful in the case you want to cover anyone traveling in your vehicle at any time.
Policy Period
Policy period is the duration of time any insurance policy covers you. It can vary depending on the policy you opt for.
Policyholder
The person who buys insurance policy from any company is a policy holder.
Premium
Premium is the amount you pay for insurance coverage. It can vary depending on the nature and terms & conditions of the policy. Proof of loss Proof of loss is the documents that you present to an insurance company when you make a request for compensation of loss done to the car. It includes documents like police reports and estimate of repair cost from the auto mechanic. The insurance company decides on how much to pay for the damages done based on the proof of loss.
Uninsured motorist coverage
The coverage that insures you against an accident with vehicle, whose driver is not insured, is uninsured motorist coverage. Under this coverage the insurance company also pays for the loss resulting from an accident in which a hit-and-run driver is involved.
