Third-party, own damage, IDV, No Claim Bonus and add-ons explained in plain language for car and two-wheeler owners.
Whether you own a scooter, a bike or a car, your motor insurance policy uses words that can be confusing. Here is a simple guide to the terms you will see most often.
Third-party, own damage and comprehensive
- Third-party cover: Pays for injury or death of other people, and damage to their property, caused by your vehicle. It does not pay for damage to your own vehicle. Third-party cover is compulsory by law for every vehicle used on public roads in India.
- Own damage (OD) cover: Pays for damage to your own vehicle from accidents, fire, theft, floods, riots and similar events listed in the policy.
- Comprehensive policy: Third-party cover and own damage cover together in one policy. Most car and bike owners choose this for wider protection.
| Cover type | Other people's loss | Your vehicle's damage | Theft of your vehicle |
|---|---|---|---|
| Third-party only | Covered | Not covered | Not covered |
| Own damage only (with separate third-party) | Covered by the third-party policy | Covered | Covered |
| Comprehensive | Covered | Covered | Covered |
IDV (Insured Declared Value)
IDV is roughly the current market value of your vehicle. It is the maximum amount the insurer will pay if the vehicle is stolen or damaged beyond repair (a "total loss"). IDV is based on the vehicle's showroom price minus depreciation for its age.
A very low IDV may cut the premium a little, but you will get less if the vehicle is stolen. Choose an IDV close to the real market value.
No Claim Bonus (NCB)
No Claim Bonus is a discount on the own damage premium for every year you do not make a claim. The NCB discount grows with each claim-free year, up to a cap set by the rules.
Important points:
- NCB belongs to you, the owner, not to the vehicle.
- When you sell your old vehicle and buy a new one, you can transfer your NCB to the new vehicle's policy. Ask for an NCB certificate or retention letter.
- If you make a claim, or let the policy stay expired for too long, you can lose the NCB.
Deductible
A deductible (also called "excess") is the part of every own damage claim that you pay yourself. There is usually a compulsory deductible, and you may choose a higher voluntary deductible for a lower premium. Pick a voluntary deductible only if you can comfortably pay it during a claim.
Popular add-ons
Add-ons are extra covers you can buy with a comprehensive or own damage policy for an extra premium:
- Zero depreciation: Normally the insurer deducts depreciation on parts like plastic, rubber and fibre while settling a claim. With this add-on, you get the claim without these deductions, subject to the policy terms.
- Engine protection: Covers engine damage from causes such as water entering the engine or oil leakage, which a basic policy may exclude.
- Return to invoice: In case of total loss or theft, pays the gap between the IDV and the original invoice price of the vehicle (and some related costs, if covered).
- Roadside assistance: Help for breakdowns, flat tyres, battery problems, towing and similar emergencies.
- Consumables cover: Pays for items like engine oil, nuts, bolts and coolant used during repair, which are otherwise not paid.
- NCB protection: Lets you make a limited number of claims without losing your No Claim Bonus.
Example (illustration only): Sunita's car has a repair bill of ₹40,000 after an accident. Out of this, ₹20,000 is for plastic and rubber parts. Without zero depreciation, suppose the insurer deducts ₹10,000 as depreciation on these parts and ₹1,000 as the compulsory deductible, so she gets ₹29,000. With zero depreciation, only the ₹1,000 deductible is cut, so she gets ₹39,000.
Claim types: cashless vs reimbursement
- Cashless claim: Take your vehicle to a network garage (a garage tied up with your insurer). After the surveyor approves the repair, the insurer pays the garage directly. You pay only the deductible and anything not covered.
- Reimbursement claim: You get the vehicle repaired at any garage, pay the bill yourself, and then claim the amount from the insurer with the bills and survey report.
In both cases, inform the insurer quickly after an accident. For theft or serious accidents, file a police report (FIR) too.
Policy lapse and inspection
If you do not renew before the expiry date, your vehicle is uninsured from the next day. Driving without at least a valid third-party policy is against the law. When renewing after a break, the insurer may ask for a vehicle inspection before giving own damage cover, and you may lose your NCB if the gap is long. Renewing on time avoids all of this.
Keep your documents valid
While driving, keep valid documents with you, in paper or approved digital form: driving licence, registration certificate (RC), insurance policy and a valid Pollution Under Control (PUC) certificate. Insurers may also check these when you make a claim, so keep them up to date.
Get the right motor cover
Renewing your car or bike insurance, or buying a new one? Tell us your vehicle details and we will help you compare covers and add-ons in simple words. Get a free motor insurance quote.