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Decoding your car insurance policy document jargon
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Introduction
Open your car insurance policy document and you will find a page of car insurance terms before you reach anything about your actual cover. Understanding a handful of these terms is enough to read your policy schedule with confidence, rather than skimming past the parts that matter.
Keep in mind
Your policy schedule lists your cover type, IDV, and optional covers in one place
IDV sets the maximum payout if your car is stolen or a total loss
No Claim Bonus and deductible both affect what you actually pay
Third-Party, Own Damage, and Comprehensive describe different levels of cover
Car insurance terms you will find in your policy
Your policy document may contain several terms that are unfamiliar at first. Here are the key ones to know:
Policy details
Information that identifies you, your car and your policy.
Policy type
Whether you have Third-Party, Own Damage or Comprehensive cover.
IDV
The Insured Declared Value of your car and the maximum payout for a total loss or theft, subject to the policy terms.
Deductible
The part of a covered claim that you pay yourself.
No Claim Bonus (NCB)
A discount on your Own Damage premium for claim-free years.
Optional covers
Additional protection you choose and pay for separately.
Premium
The amount you pay for your insurance, including its different components and applicable taxes.
Personal Accident cover
Cover for the owner-driver in case of death or permanent disability caused by a road accident, subject to the policy terms.
Hypothecation
The financier's interest in your car when it is bought with a loan.
Endorsement
A change made to your policy after it has been issued.
Cashless
A claim arrangement where the insurer pays the approved amount directly to a network garage.
The identity details at the top of your schedule
Your policy document starts with details that identify you, your car and your policy. These may include your policy number, proposer name, registration number, make and model, engine number and chassis number.
Check these details when you receive your policy. Any errors should be corrected so they do not cause issues during a claim.
The term that decides your cover type
Your policy type tells you what your insurance covers:
Third-Party
Covers your liability for injury, death or property damage caused to another person. It does not cover your own car.
Own Damage (OD)
Covers damage to your own car from covered risks.
Comprehensive
Combines Third-Party and Own Damage cover.
Your policy type determines which parts of your insurance can respond when something goes wrong.
The value your payout depends on
IDV stands for Insured Declared Value. It is the value assigned to your car for the policy year and is generally the maximum amount your insurer will pay if your car is stolen or declared a total loss, subject to the policy terms.
You will usually find the IDV in your policy schedule. It reduces as your car gets older because of depreciation.
What you pay yourself before your insurer does
A deductible is the part of a covered claim that you pay yourself. Your policy may show a compulsory deductible and, if you have chosen one, a voluntary deductible.
For cars, the compulsory deductible is ₹1,000 for cars up to 1500cc, such as a Maruti Suzuki Alto, and ₹2,000 for cars above 1500cc, such as a Hyundai Creta. A voluntary deductible is an additional amount you agree to pay when making a claim.
Other deductions, such as depreciation or costs for items not covered by your policy, may also apply.
The discount for staying claim-free
No Claim Bonus (NCB) is a discount you earn on your Own Damage premium for completing a policy year without making a claim.
Your policy document will usually show your NCB as a percentage. Making a claim can affect the NCB you carry into your next renewal, subject to the policy terms.
The extra protections you chose separately
Optional covers are additional protections you choose and pay for on top of your base policy. They cover specific costs or situations that your standard policy may not cover.
Your policy schedule will list the optional covers you have selected, such as Zero Depreciation, Return to Invoice or Consumables Cover. If an optional cover is not listed in your policy document, you should not assume that you have it.
Personal Accident cover and your nominee
Personal Accident (PA) cover provides a lump-sum benefit to the owner-driver in case of death or permanent disability caused by a road accident, subject to the policy terms.
The compulsory owner-driver PA cover is generally ₹15 lakh. Your policy will also mention your nominee, who can receive the applicable death benefit. Check that your nominee details are up to date.
If your car is financed
Hypothecation means that a bank or other financier has a financial interest in your car because you bought it with a loan.
Your policy schedule may show the financier's name under the hypothecation details. If the loan has been repaid, make sure the hypothecation is removed from your vehicle and insurance records.
Endorsement, and when you will actually see the word
An endorsement is simply a recorded change to your policy, made after the original document was issued. Updating your address, correcting a spelling mistake, or adding a nominee all get recorded this way, usually as a separate page attached to your original schedule.
Seeing this word does not mean anything went wrong. It just means something on your policy was updated after day one, and the endorsement page shows exactly what changed and when.
What cashless actually means on your document
Cashless refers to a repair where your insurer pays the garage directly, so you do not pay upfront and then wait for a reimbursement. Your policy document may list cashless partner garages, or you can check the current list with your insurer directly.
How Kiwi explains every term on your policy document
At Kiwi Insurance, the terms on your policy document are explained in plain language, next to the figure or cover they relate to. If a cover has a sub-limit, meaning a lower limit within the overall cover, Kiwi states it clearly alongside the relevant clause instead of leaving you to look for it in the fine print.
This applies to the key terms covered in this article, including your cover type, IDV, deductible, No Claim Bonus and optional covers. The aim is simple: you should be able to read your policy document and understand what each line means without having to contact your insurer for an explanation.
Conclusion
None of these terms are complicated once you know what each one is doing on the page. IDV sets your payout, deductible sets what you pay yourself, No Claim Bonus rewards a claim-free year, and optional covers show what you have added beyond the basics. Keeping this short list in mind makes your policy document far easier to read the next time you open it, whether you are checking your cover or comparing it at renewal.
A policy document is easier to trust once you understand what it says. Buy or renew your car insurance policy with Kiwi, and get a policy document written in plain language from the start.
Written by
Reuben Solomon
Lead Content Writer
Reviewed by
Rupinderjit Singh
Head - Tech Product & Digital Business
Frequently asked questions
IDV stands for Insured Declared Value, and it is the maximum amount your insurer pays if your car is stolen or considered a total loss. You will usually find it printed on your policy schedule, alongside your premium and the type of cover you hold.