5 Facts on Voluntary Deductible in Car Insurance

Although only third-party car insurance is mandatory as per Motor Vehicle laws in India, we recommend every car owner procure comprehensive car insurance. Unlike third-party insurance, a comprehensive plan like our Private Car Package Policy protects you against damages to third parties as well as damages to your own vehicle.

However, since a comprehensive car insurance policy provides greater coverage, it comes with a higher price tag. And that is why many car owners may refrain from buying such a policy. But, by doing so, they expose their vehicle to the risks of theft and damages.

If you don't want to spend more on your car insurance, you can reduce your premium by opting for a voluntary deductible while buying the policy. In this article, we'll explain what voluntary deductible means, how it can help reduce your premium, and whether it's beneficial to opt for it or not. Keep reading.

What is a voluntary deductible in a car insurance policy?

A voluntary deductible in a car insurance policy refers to a fixed amount that the policyholder agrees to pay out of his/her pocket while buying car insurance. Unlike compulsory deductible, the voluntary deductible component is purely the car owner's choice and is not imposed by the insurance provider.

Let's understand voluntary deductible with the help of an example. Suppose you've purchased comprehensive car insurance with a voluntary deductible of ₹2,500. Now, let's assume that your car got damaged in an accident, drawing a bill of ₹20,000 for repairs.

In such a case, your insurer will deduct a compulsory deductible (which is fixed by the regulatory authority based on your vehicle engine capacity) along with your chosen voluntary deductible from the claim amount. Assume the compulsory deductible is ₹1000. In this case, you pay ₹1000 + ₹2,500 = ₹3,500, and the insurer pays ₹16,500.

How does voluntary deductibles help in reducing premium?

When you opt for the voluntary deductible under your car insurance policy, you reduce the liability of your insurer by promising to bear a part of the claim amount. As a result, your insurance provider sees a reduced payout on claims, therefore choosing to reduce your premium to a certain extent.

The amount of voluntary deductible chosen by you is inversely proportional to the premium amount you need to pay. It means higher the voluntary deductible, lower the car insurance premium. However, you should note that a voluntary deductible is not available for third party car insurance policies.

The maximum discount that you can avail on your motor insurance premium by opting for a voluntary deductible is listed in the table below:

5 important facts about voluntary deductible in car insurance

Here are the five crucial facts about voluntary deductibles in car insurance that you must know as a car owner:

1. You need to pay the voluntary deductible only if you make a claim

You must pay the voluntary deductible amount only if you claim your car insurance policy. Moreover, you don't have to pay the deductible amount unless your insurer approves your claim. Once your claim gets approved, your insurer will ask you to pay the deductible amount at the workshop. The insurer will settle the remaining bill amount.

2. Voluntary deductible is not the same as co-payment

It's a common misconception among many people that voluntary deductible and co-payment are the same things. However, this isn't true. While voluntary deductible is a fixed amount a policyholder must pay at the time of claim, co-pay refers to a percentage of the claim amount that has to be borne by the policyholder.

3. Voluntary deductible is not an additional expense

Many people think that voluntary deductible is an additional expense a car owner needs to bear. However, this is a misconception. You don't have to pay anything extra to opt for a voluntary deductible on your car insurance policy. Opting for this deductible is a choice that is purely dependent on the policy buyer, and the insurer can never force him/her to do so.

4. The compulsory deductible is not eliminated even if you opt for voluntary deductible

If you think that by opting for a voluntary deductible on your car insurance policy, you can get rid of compulsory deductible, you're mistaken. When you raise a car insurance claim, you're required to pay the sum of both – compulsory deductible plus the voluntary deductible.

5. Opting for a voluntary deductible is not always beneficial

Contrary to popular belief, it's not necessary that opting for a voluntary deductible will always be beneficial for you. Though it's beneficial for drivers who may never make a claim, it can turn out to be disadvantageous for those who drive in an accident-prone area or raise frequent car insurance claims.

Should you opt for a voluntary deductible or not?

While you can't get rid of compulsory deductibles on your car insurance policy, opting for a voluntary deductible is a choice that purely rests on you. Though it helps lower car insurance premium, it also increases your liability or risk when you meet with an accident. Hence, if you think that the chances of you making a claim are very slim, opt for a voluntary deductible; else, do not.

If you want to avail of comprehensive car insurance online at the most competitive price, you can head to the Car Insurance section on our website. Enter your vehicle's details and personal info to get a quote. Based on the policy you choose, you can pay the premium via credit/debit card, net banking, or any other online payment method and complete your purchase.

Difference between compulsory deductible and voluntary deductible

The table below highlights the key difference between compulsory deductible and voluntary deductible:

Conclusion

In conclusion, understanding voluntary deductibles helps you take control of your insurance costs. If you’re confident in your driving and want to save on premiums, choosing the right deductible amount while buying car insurance online can offer both flexibility and savings—without affecting your no claim bonus in car insurance.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.