The world of insurance has its own set of jargons which need a good understanding for comprehending the policy document. Knowing the most important terms also means better equipment at the time of buying/renewal or claims. Let's go ahead and explore the most commonly used terms in the world of two wheeler insurance.
Cover: A term used to denote the liability of the insurance company which contains details pertaining to maximum monetary liability the insurer will bear when a claim situation occurs.
First Party: This term is used represent the insured member and the two-wheeler.
Second Party: Refers to the insurance company providing the cover.
Third Party: Used to represent the property/person involved in the accident caused by the first party.
Premium: A fee paid by the insured member to the insurance company for providing the insurance cover for a fixed term. This amount is payable every year and is determined on multiple factors such as the cost of the vehicle, model, make and so on.
Insured Declared Value (IDV): Used to represent the market value of the motorcycle. The IDV is the maximum sum payable by the insurance company to the insured member in case of total loss of motorcycle.
Zero Depreciation Cover: An optional cover in the insurance policy which provides for no deduction on the value of parts replaced in the two wheeler on the basis of depreciation, providing room for a higher claim amount.
No Claim Bonus (NCB): A discount the insured is eligible for at the time of renewal of the insurance policy if there were no claims made during the previous policy year. Represented as a percentage, it is applicable at the time of renewal and is offered as a deduction in the premium amount.
Third party Cover: A cover which offers protection against legal and monetary liability arising out of an accident involving the insured motorcycle. This type of cover is mandatory by law and covers third party person and property.
Comprehensive Cover: This type of cover option not only provides cover for third party liability, but also shields the insured bike and its occupants against damage/injury/death when a situation arises.
Exclusion: A term used to denote those risks that do not find cover under the insurance policy. Such exclusions can be covered through an Add On option, depending on the availability.
Personal Accident Cover: An Add On cover which protects the rider against bodily injury/death arising out of the accident. It also offers compensation for permanent or total disability.