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What are Deductibles?
Deductibles refers to the amount that the policy holder agrees to pay out of their pocket before the insurance company covers the rest of the claim amount Deductible is expressed as a fixed amount or a percentage of the claim amount, depending on the policy terms Deductibles are not applicable in Third-Party Liability Insurance as it covers only the damage caused to the third-party vehicle and not the policy holder's vehicle. Deductible is not applicable for Third-Party claims, as the liability is borne entirely by the insurance company. There are two types of deductibles that may be part of the Car Insurance policy: Voluntary Deductibles, Compulsory Deductibles.
Types of Deductibles
Voluntary Deductible
Voluntary deductible is an option that the policy holder can choose to opt for, in addition to the compulsory deductible. Voluntary deductibles are a way for policy holders to customise their insurance policy based on their risk appetite and budget. It is important for policy holders to strike a balance between the voluntary deductible and the premium amount, as a very high deductible may not be financially viable during a claim process
Compulsory Deductible
This is a fixed amount that is mandatory for policy holders to pay before their insurance company starts paying out claims. In India, the compulsory deductible amount is determined by the Insurance Regulatory and Development Authority of India (IRDAI) and varies depending on the cubic capacity of the car engine. The minimum compulsory deductible is Rs. 1,000 for cars with an engine capacity of up to 1,500 cc and Rs. 2,000 for cars with an engine capacity of more than 1,500 cc. Policy holders should carefully consider the deductible amount while choosing a policy, as it can affect the overall cost-benefit analysis of the policy
Frequently Asked Questions
Is the deductible applicable to Third-Party claims under Passenger Carrying Vehicle Insurance?
No, the deductible is not applicable to third-party claims, as liability is borne entirely by the insurance company
What is the benefit of choosing a voluntary deductible for Passenger Carrying Vehicle Insurance?
Choosing a voluntary deductible can help policy holders lower their premium amount, as they are opting to bear a higher portion of the risk in case of a claim
Is it recommended to opt for a high voluntary deductible in Passenger Carrying Vehicle Insurance?
The choice of the voluntary deductible amount depends on the policy holder's financial situation and risk appetite. While a higher voluntary deductible can result in a lesser premium, it should be balanced with the policy holder's ability to pay the deductible amount in case of a claim
