Understanding car insurance terms can help you better navigate your policy. Here are some simplified definitions of commonly used terms:
1st Party (Assured): The owner of the vehicle and the insurance policy.
2nd Party (Insurer): The insurance company providing the coverage.
3rd Party: Anyone involved in an accident, excluding the 1st and 2nd parties, their relatives, or employees.
Policy Terms and Coverages
- Agreed Value: A fixed amount agreed upon with your insurer, paid in case of total loss or theft.
- Fair Market Value: The current estimated market value of your car at the time of loss or damage.
- Deductible Fee: A portion of repair costs paid by the policyholder for vehicles older than 3 years (not applicable to total loss).
- Depreciation Fee: The difference in value between a car part's current worth and its original purchase price, applicable to vehicles over 3 years old.
- Legal Assistance: Covers legal fees arising from accidents that lead to court proceedings.
- Loss of Use: Covers transportation costs while your car is being repaired.
- Participation Fee: Insured's share on each and every claim. It is composed of Deductible amount and Depreciation rate. To know more about the exact computation of each, you may refer to your Policy Jacket.
- Policy Schedule: A document detailing your coverage, add-ons, and costs.
- Premium: The regular payment you make for your insurance policy.
- Roadside Assistance: An add-on service offering towing, tire replacements, and more.
- Surcharge: An extra fee added to your premium for factors like at-fault accidents or multiple claims.
- Totaled (Write-off): A car that is too damaged to repair cost-effectively.
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