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When buying a car insurance policy, it is important to note that you have to bear two primary costs i.e. premium and deductible. Premium is the amount of money you pay to receive coverage, whereas deductible is the amount you have to pay out of pocket in the event of a claim. While the premium of your car insurance policy depends on your car’s make and model, engine capacity, registration year, etc. Whereas, voluntary deductible is of two types i.e. compulsory deductible and voluntary deductible. Read on to know about car insurance deductible in detail.
Deductible in car insurance is an amount you have to pay out of your pocket before the insurance company processes the claim amount. The deductible amount is set by the Insurance Regulatory Development Authority of India based on the car’s engine cubic capacity. With deductible, you are sharing a part of the risk with the insurance company to ensure your claim is genuine
For instance, if the deductible in your car insurance policy is set at Rs. 3,000 and the claim amount is Rs. 40,000 then in this case, Rs. 3,000 will have to be paid by you and the remaining amount of Rs. 37,000 will be paid by the insurance company.
Under car insurance policy, deductible is of two types:
As the name suggests, compulsory deductible has to be mandatorily paid by the vehicle owner. This type of deductible is fixed by the insurance company depending on the engine capacity.
This type of car insurance does not impact your car insurance premium as it has to be paid at the time of the claim. Premium of your car insurance policy is determined based on the age of the car, make and model, insured declared value, etc.
As the name suggests, this type of deductible in car insurance is voluntary and can be decided based on the amount you opt to pay at the time of claim. Opting for a higher deductible attracts a lower premium, whereas, lower deductible attracts a higher premium. This is an out of pocket expense that has to be borne by the insured at the time of claim.
|Compulsory Deductible||Voluntary Deductible|
|This is the amount that has to be mandatorily paid by the vehicle owner||This is the amount that the insured can opt to pay at the time of claim|
|This type of deductible does not have any impact on the premium amount||This type of deductible has an impact on the out of pocket expense and the premium amount|
|Only compulsory deductible has to be paid at the time of claim||Both compulsory and voluntary deductible has to be paid at the time of claim|
|Discourages petty claims filed by the insured||Reduces car insurance premium|
You cannot decide on the amount of compulsory deductible, however, you can choose the voluntary deductible amount. When you opt for voluntary deductible, the claim amount will be lower and out of pocket expenses will be higher.
You can consider opting for voluntary deductible if you own an expensive car since the premium for this type of car will be high
No claim bonus will be impacted in case of small claims
One of the main benefits of voluntary deductible in car insurance is the discount in premium you receive. Higher deductible attracts lower premium, and vice versa.
As per IRDA, cars with more than 1500 cc engine capacity attracts deductible of Rs. 2,000
All types of vehicles plying on Indian roads attract compulsory deductible
In such cases, avoid filing a claim as it can impact your no claim bonus