Buying a car insurance cover requires considering not just one, but many factors in tandem. The age of your car, its engine capacity, any accessories fitted, are some of the factors that impact the premiums. But apart from these, deductibles are another component that have a direct bearing on the premium amount. Hence it is critical to understand the concept of deductible before finalising your purchase.
The concept of deductible in car insurance plans
Deductible is that portion of the claim which you, the policyholder, are required to pay at every claim. While the insurance policy covers for majority of the expenses, the deductible is something that you need to pay from your own pocket.
Types of deductibles—Compulsory and Voluntary
In a car insurance policy, there are two types of deductibles–compulsory or standard deductible and a voluntary deductible. As the name suggests, a compulsory deductible is mandatorily required to be paid by for all claims. This amount of compulsory deductible is defined by the regulator, Insurance Regulatory and Development Authority of India (IRDAI) and is based on the engine capacity of each vehicle. This amount of compulsory deductible is set at ₹1,000 for cars equal to and below 1500 CC whereas it is ₹2,000 for vehicles above 1500 CC. In addition to that, the insurance company may charge a higher deductible for older cars too. You can visit the official website of IRDAI for further details. * Standard T&C Apply
Now moving over to voluntary deductibles, it can be opted in addition to the standard deductible. Such voluntary deductible is the amount you agree to pay over and above the compulsory deductible at the time of claim. In addition to that, voluntary deductible helps lower the car insurance prices by lowering the impact of risk the insurance company has to undertake. Thus, increased risk by the insured leads to a reduction in the premium amount. Alternatively, you can understand voluntary deductible as being inversely proportional to premium of your policy. * Standard T&C Apply
Facts about voluntary deductibles in car insurance
Here are four facts about voluntary deductibles:
- You need to pay the voluntary deductible only when a claim is raised
The voluntary deductible in your car insurance policy is required to be paid only when you raise a claim. When you make an insurance claim, such an amount of voluntary deductible is reduced from the pay-out, and you are required to bear its incidence. *
- Voluntary deductible is no additional expense
When you opt for a voluntary deductible, you need not pay in addition to your existing insurance premium to avail it. Instead, choosing the voluntary deductible lowers the premium since you agree to undertake a specified portion of the claim over and above the standard deductible of your insurance plan. *
- Voluntary deductible differs from co-payment
While prima facie it may seem similar, the voluntary deductible isn’t the same as co-payment clause. The amount of such voluntary deductible remains fixed irrespective of the claim amount, however, the co-payment terms are as a percentage of the claim amount. Thus, higher the claim, higher will be the co-payment required. *
- Voluntary deductible and NCB are quite different
While both, voluntary deductible and NCB are used to lower the burden of premium, both are awarded at different times. The no-claim bonus is granted when no insurance claims are made during a period whereas a voluntary deductible is required to be paid when you make a claim. *
* Standard T&C Apply
To sum it up, deductible in a comprehensive insurance plan can come handy. While there is no skipping the compulsory deductible, you can opt for a higher or lower voluntary deductible based on your ability to pay at the time of claim. To help you decide the impact of voluntary deductible on your premium, you can make use of a car insurance premium calculator. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.