Deductible in Car Insurance

Deductibles as the name suggests, is a cost-sharing arrangement between you and your insurer, where a portion of the car insurance claim must be paid by you.

Still confused? Let’s understand this with the help of an example.

One major complaint that has always hit us, is that insurance companies are not always transparent or upfront about the terms. Customers feel that they are only told half a truth about claims, and when time comes not everything is taken care off by the insurer, like promised. However, your insurer will probably tell you that your policy document has a term called deductibles, which explains this part of the bargain.

But, oh boy, the pain of going through a 50 pager! 😔 And hence we thought of making the meaning of deductibles and the difference between Compulsory & Voluntary deductibles simple for you.

Suppose your car insurance claim amount is of Rs.10,000. After considering depreciation, if you have a deductible of INR 1000 , then the Insurer is liable to Pay INR 9000 and the rest of the Rs.1000 has to be paid by you.

Now there are 2 types of deductibles that come in to play: Compulsory or Voluntary deductibles.

Compulsory deductibles

Compulsory deductibles is one where the insured has no choice but to has pay one part of the claim. As per IRDAI regulations, the compulsory deductible is INR 1000 if the Car is not exceeding 1500 Cubic Capacity and INR 2000 if the Car has Cubic Capacity greater than 1500. A compulsory deductible doesn’t affect the premium or have any impact in lowering it, as premium is calculated taking into conideration other factors like IDV, make and model.

Voluntary deductible

Voluntary deductible is one where you can take a hit on your pocket and pay a part of the car insurance claim, which was technically supposed to be taken care of by your insurer. But because you have voluntarily opted for this, your premium gets lowered. You have options from which you can choose the voluntary deductibles. And during the time of car insurance claim the amount of compulsory and the voluntary deductibles both get deducted from your admissible claim amount These are applicable for each and every claim.

We say because it instils a greater sense of responsibility while handling your assets and is a joint pact between you and your insurer. It makes you cautious about handling your assets and therefore, in turn, helps you in using your assets better.

And this can also help you save on your insurance premium. But that’s only when you know that the amount for voluntary deductible you are opting for is well within your reach.

In a way, Deductibles is a way of making you value your assets more!