Your policy is full of
words. Let's make them simple.
Insurance wording can look complicated even when the underlying idea is simple. Search a term, understand what it means, see a practical example, and then learn why it can matter when a motor claim is assessed.
How to use the Policy Decoder
What does the word mean?
What does it mean in ordinary language?
How could it appear in a real claim?
Can it affect coverage or settlement?
Where should you look?
IDV — Insured Declared Value
In simple words: IDV is the insured value of the vehicle used in the policy for relevant own-damage situations. It is not automatically the same thing as today's resale price.
Example
Your policy schedule shows an IDV of ₹8,00,000. The vehicle is later assessed as a total loss. The settlement is not simply “whatever the car was worth on the road that day”; the policy terms, applicable deductions, salvage and circumstances matter.
Why it matters
IDV can become particularly important in total-loss/theft situations. Check the IDV printed in your policy schedule and understand how the policy treats total loss, theft, salvage and deductibles.
Deductible / Excess
In simple words: A deductible or excess is the part of an otherwise covered loss that remains payable by the insured under the policy.
Example
If an admissible loss is ₹50,000 and an applicable excess is ₹2,000, the calculation may start with ₹48,000 before other applicable adjustments. This is only an illustration; your policy wording controls the actual treatment.
Don't confuse it with
Depreciation, excluded items and salvage are different concepts. A settlement should be understandable enough for you to see which amount is being deducted and why.
Depreciation
In simple words: Depreciation generally recognises age/use-related reduction in the value of certain parts or components when a claim is assessed, subject to the policy terms.
Example
A damaged part is replaced. The insurer's assessment applies an eligible depreciation amount to that part. The policyholder sees a deduction and wants to know where it came from. The correct approach is to ask for the item-wise calculation and policy basis.
What changes it?
Applicable policy wording and add-ons can affect how depreciation is treated. “Zero depreciation” does not mean every possible claim deduction disappears.
Zero Depreciation / Nil Depreciation
In simple words: This is an add-on intended to reduce or remove specified depreciation deductions for covered parts, according to its wording and limits.
Example
You have a zero-depreciation add-on. A covered damaged part is replaced. The add-on may reduce the depreciation deduction that would otherwise apply to that part. It does not automatically cover every repair expense.
Check the fine print
Look for eligible parts, exclusions, limits, number of claims if stated, deductible treatment and the exact wording of the add-on.
NCB — No Claim Bonus
In simple words: NCB is a renewal discount/benefit associated with a claim-free policy period, subject to applicable terms.
Example
A policyholder has built up an NCB and then has a claim. Whether and how the NCB is affected depends on the policy/renewal terms and the circumstances.
Why it matters
NCB is mainly about premium at renewal, not a separate pot of money that is deducted from a claim settlement.
Own Damage (OD)
In simple words: Own Damage cover relates to loss or damage to the insured vehicle, subject to the policy's coverage, exclusions and conditions.
Third-Party Cover
In simple words: Third-party motor insurance addresses specified legal liability arising from use of the vehicle toward third parties, subject to applicable law and policy terms.
Example
Your vehicle is involved in an incident in which another person's vehicle/property is damaged or a person suffers injury. The third-party part of motor insurance is relevant to the liability side of the incident.
Remember
Third-party liability and damage to your own vehicle are different questions. A person can have one without the other depending on the policy.
Comprehensive / Package Cover
In simple words: A broader motor policy can combine own-damage protection with third-party liability, with exact cover depending on the policy and applicable terms.
Never treat the word “comprehensive” as “everything is covered.” Exclusions, deductibles, conditions and add-on wording still matter.
Add-ons
In simple words: Add-ons are optional covers purchased in addition to the base policy, subject to their individual wording, limits and exclusions.
Exclusion
In simple words: An exclusion is a situation, loss, item or circumstance that the policy says is not covered, subject to the exact wording.
Policy Condition
In simple words: A condition is a requirement/rule attached to the policy or claim process. Breach of a condition can matter, but the effect depends on the exact wording and circumstances.
Do not accept or reject a claim objection merely because someone uses the word “condition.” Read the actual clause.
Endorsement
In simple words: An endorsement is a documented change, addition or modification to the policy terms/details.
Salvage
In simple words: Salvage generally refers to the residual value or damaged property left after a loss.
It can become important in total-loss or major-damage settlements. Ask how salvage has been treated in the assessment and who retains the damaged vehicle/property under the settlement arrangement.
Total Loss
In simple words: A vehicle may be treated as a total loss when, under the applicable policy terms and assessment, repairing/recovering it is not dealt with as an ordinary repair claim.
Do not decide “total loss” solely from the workshop estimate. The policy, assessment and applicable rules/terms matter.
CTL — Constructive Total Loss
In simple words: CTL is a policy concept used for a vehicle where the loss/damage reaches the relevant threshold or circumstances specified by the policy, making the vehicle effectively treated as a total loss.
Insurable Interest
In simple words: It means having a recognised financial or legal interest in the subject of insurance such that the person would suffer a relevant loss if the insured event occurred.
Underinsurance
In simple words: Underinsurance can arise when the insured value/amount is lower than the relevant value or exposure, depending on the policy and the type of cover.
Do not assume every motor-claim deduction is “underinsurance.” Ask the insurer to identify the actual calculation and policy basis.
Consumables
In simple words: Consumables are items used up during repair, such as certain oils, lubricants, adhesives, clips or other specified materials, depending on the policy/add-on wording.
A consumables add-on may provide specified cover for such items. The exact list and conditions must be checked.
Cashless Repair
In simple words: In a cashless arrangement, the insurer and network workshop follow an approved repair/payment process so the policyholder does not necessarily pay the full admissible repair amount upfront.
Reimbursement Claim
In simple words: The policyholder may pay eligible repair expenses and then seek reimbursement according to the policy/process.
Keep invoices, payment proof, estimates, photographs, repair details and other relevant documents. Reimbursement does not mean every amount on a workshop bill is automatically payable.
Quick Policy Dictionary
Future versions of this page can expand into a searchable dictionary with every relevant motor-insurance term, its exact policy location, examples, common misunderstandings and links to real ClaimVoice cases.