Insurance is a technique formed to cover the risk derived from various circumstances also known as a risk management technique. It covers the risk by hedging. A written agreement between two parties determines the terms and conditions of the policies.
Insured and insurer are the two parties. There are various types of insurance like life insurance, general insurance, and marine insurance, etc.
Motor insurance is one of the kinds of insurance cover the risk of various vehicles like cars, buses, etc. from various risks like accidental risk and risk from natural sources. Underinsurance you have to pay a regular premium for taking policy also known as consideration.
If you are unable to pay the whole premium at a time and choose to pay a premium in installment then a down payment is generally required or needed to pay to get your car insurance policy started. In some cases, you need to pay low down payment car insurance for a policy.
Types of car insurance:
To select the most suitable and effective car insurance policy, it is important to know the types and kinds of car insurance offered by various car insurance companies. There are major two types of car insurance which are discussed below:
- Third-party car insurance: It is mandatory for by law. Under this policy, the third party will receive a claim for damages if you met with an accident with that third party and finally you saved
- Comprehensive car insurance: Comprehensive car insurance as the name suggests covers more than one element of risk. It not only covers the third party risk but also the risk of your vehicle. It is extensive and selects by mostly the entire vehicle owner.
Important terminologies of car insurance:
- Insured declared value (IDV): it is the maximum insured value of the policy. It is that amount which is paid by the insurer in case of loss to the vehicle. It is the current market value of vehicles assessed at the time of insurance claim.
- Zero depreciation cover: depreciation means normal wear and tear of car value. If you claim when an accident occurs then the company and insurer use depreciation factors to determine the payable amount. Because your car depreciates every year and the company does not pay anything for depreciation even if you take a comprehensive policy of car insurance.
- No claim bonus: it is in the form of a discount, cash back, and rewards. It is the discounted amount get by the insured from the insurer for making zero claims during the policy term. If you don’t claim then during the next policy you get a discount in premium in the form of fewer premiums.
- Down payment car insurance: payment schedule of policy will depend on how much amount you pay at the time of taking the policy. You may pay the full amount at a time and pay in installment. If you pay the full amount you get a discount but if you are unable to pay then you may choose the installment plan. Under installment, the amount you pay at a time of policy to get the policy started is known as a down payment. It may be low down payment car insurance.
- Third-party liability covers: It saves the vehicle owner and secures the owner from any damages, loss, and expenses to the third party due to his mistake.