Important terms in Car Insurance you must know

Car insurance is purchased by many people because it is mandatory by the government and some purchase it because it provides financial protection. You cannot drive on roads in the UAE without car insurance. 

Understanding the insurance policy and its terms is very important as it helps you to know what the insurance policy offers to you. Here in this article, we provide you with the most used car insurance terms that are listed in the policy. 

1. Insured Declared Value

2. No claim bonus

3. Own Damages Premiums

4. Third-party cover

5. Zero Depreciation coverage

6. Accidental coverage

1. Insured Declared Value

Insured Declared Value is the current market value of the car minus depreciation. This is the highest payable amount by the insurance company to the policyholder. If the car is totally damaged or it got stolen the Insured declared value is the amount that can be claimed from the insurance company. 

During the purchase of an insurance policy or during the renewal of an insurance policy, you keep in mind that you should not quote an insurance value lesser than the market value. If you do this then you will be getting an incorrect amount as compensation. The loss or damages that are incurred to the car are paid in the form of insurance compensation. 

2. No Claim bonus

If you are not making any insurance claims during a year then no-claim bonus will be issued. No claim bonus is like an appreciation for not making an insurance claim. It is given in the form of a discount which will be against your insurance policy. 

Having a no-claim bonus will reduce the insurance premium that you will pay during your policy renewal. If you are buying a new car then you can transfer your no-claim bonus to the new insurance policy that you buy.  

3. Own Damages premiums

This insurance premium amount is paid to the insurance company that covers the insurance. Own damages premiums provide insurance coverage against a loss that is caused by any event which is beyond your control. 

Natural calamities are the best examples for example earthquakes, tornados, tsunamis and others. 

The own damages premiums vary for different car models, the geographic zones, cubic capacity of the car and model of the cars. Get information about this coverage from the insurance company. 

4. Third-party cover

The third-party cover provides protection to the car owner which is against any financial liabilities. These are to protect against any financial losses that result from the happening of an event. 

This happening of an event could be death or physical injury or damage to the property and others. 

The victim can file a third-party claim against the owner of the vehicle and the insurer will pay for the claim on behalf of the car owner. 

5. Zero Depreciation Cover

This will provide a higher claim amount as the insurer will waive off the depreciation on replaced parts. With zero depreciation cover, the policy owner will get the benefit of a good claim amount as there is no depreciation on replaced parts of the vehicle. 

6. Accidental Coverage

Having personal accidental coverage will provide financial protection against mishaps. Accidental losses such as death or permanent disability in a road accident cannot be compensated with money but financial cover will provide support to the victims and persons under its coverage. It is important to check with the insurance company whether they are including personal accident coverage or not.

Take away

Having an understanding of the insurance terms will not only increase your knowledge on your insurance policy, it will also make you responsible so that you can get to know what is covered and what is not covered under your insurance. You can approach the insurance company with confidence while making a claim.