Updated on - 09 Feb 2026
Under the Indian Motor Vehicle law, third party car insurance is mandatory for all vehicles. However, it does not protect your car. So, for enhanced financial protection, a comprehensive car insurance policy is the better choice. However, since it offers broader coverage, it also comes with a higher premium. For this reason, many car owners may choose to skip such a policy. But there’s a catch: you can lower your comprehensive car insurance premium by opting for a voluntary deductible when purchasing the policy.
In this article, we'll explain what a voluntary deductible means, how it can help reduce your premium and whether it's beneficial to opt for it or not.
What is a voluntary deductible in a car insurance policy?
A voluntary deductible in a comprehensive car insurance policy is the amount a policyholder agrees to pay when making a claim, with the insurer covering the rest. This decision reduces the premium because you are paying a greater share of the risk.
How do voluntary deductibles help in reducing premiums?
When you choose a voluntary deductible, you agree to pay a certain portion of the claim amount from your own pocket. As you take on more risk yourself, the insurer reduces the premium you pay. This approach is best if you can afford to cover minor repair costs and do not anticipate making many claims.
5 Important facts about voluntary deductible in car insurance
Here are certain aspects of voluntary deductible that you should know:
- Payable only when making a claim: If your car insurance has a voluntary deductible, you bear that cost only when you file a claim. No claim means no voluntary deductible payout.
- Not the same as co-payment: A voluntary deductible is an amount you have to pay per claim, while a co-payment (co-pay) often refers to a fixed percentage of the claim amount you pay each time you make a claim or use a service.
- Not an additional expense: Choosing a voluntary deductible with your car insurance doesn’t mean you pay extra every month. Instead, it means you’ll cover a small portion of the cost yourself if you make a claim, in exchange for lower monthly premiums.
- Compulsory deductible stays intact: Even if you opt for a voluntary deductible, the compulsory deductible still exists and is in addition to the voluntary amount, which is paid while making a claim.
- Not always beneficial: Opting for a voluntary deductible will lower your premium but increase your out-of-pocket expenses, especially with continuous claims or high-risk situations.
Should you opt for a voluntary deductible or not?
A voluntary deductible should be selected based on your driving behaviour and claim patterns. It will decrease your car insurance premium, but it increases the amount you pay out of pocket when you file claims. For safe drivers who make few claims, it can save money, but it might not work well for high-risk customers or those with several accidents on their record.
Impact of voluntary deductible on claim settlement
Voluntary deductible reduces the insurer’s payout and, in turn, lowers your comprehensive car insurance premium. While this can help reduce your renewal cost, it also means higher out-of-pocket expenses when your car is repaired. Therefore, choosing the right deductible amount is crucial.
Difference between compulsory deductible and voluntary deductible
A compulsory deductible is a minimum specified amount that the insured must pay when filing a claim. This is non-negotiable and applies to all claims.
A voluntary deductible is an amount selected by the policyholder in addition to the mandatory or compulsory deductible. It can reduce premiums but increases out-of-pocket expenses during a claim.
Voluntary deductible vs no deductible: pros and cons
Here’s a quick look at the pros and cons of choosing a voluntary deductible versus having no deductible in your car insurance.
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Feature
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Voluntary deductible
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No deductible
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Premium
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Lower premium due to higher out-of-pocket contribution
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Higher premium as the insurer bears the full claim cost
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Claim settlement
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You pay the agreed deductible amount during a claim
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The insurer pays the full claim amount
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Savings
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Offers long-term savings if claim frequency is low
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No immediate savings on premiums
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Risk
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Higher personal expenses during a claim
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Minimal personal expense during a claim
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Best for
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Safe drivers with low claim probability
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Drivers preferring zero upfront expense during claims
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Common misconceptions about voluntary deductibles
Some of the common myths prevailing about voluntary deductibles are:
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Misconception
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Fact
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You pay the voluntary deductible with the premium
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The deductible is payable only when a claim is filed
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A higher deductible is always better
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The more the deductible, the lower the premium, but it means higher out-of-pocket payments during claims
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Compulsory and voluntary deductibles are the same
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A compulsory deductible is mandatory in nature, whereas a voluntary one is optional
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Tips to maximise savings with voluntary deductibles
Try these tips to maximise your savings with voluntary deductibles while keeping your car insurance coverage effective and affordable.
- Choose a deductible based on driving habits
- Compare premium savings
- Maintain a claim-free record
- Combine with discounts
Example of voluntary deductible scenarios in car insurance
Let’s say you choose a voluntary deductible of ₹5,000. After an accident, if the repair bill is ₹20,000, you pay ₹5,000 while the insurer covers the remaining ₹15,000. In another case, if the damage costs only ₹3,000, you pay the full amount since it’s below the deductible. While this increases out-of-pocket expenses, it helps lower your insurance premiums.
Conclusion
Taking on a voluntary deductible with your car insurance policy reduces premiums but increases out-of-pocket costs. It best suits safe drivers with few claims, but it might not be the best if you claim often. Consider your driving behaviour and financial position when choosing a voluntary deductible.
If you are looking to buy affordable car insurance with adequate coverage, fill out the form on this page. Our insurance experts will provide tailored advice to find the right policy.
FAQs
1. How does a voluntary deductible affect third-party car insurance?
A voluntary deductible applies only to the own-damage (OD) portion of a comprehensive car insurance policy. It does not affect third-party liability coverage.
2. Is a voluntary deductible mandatory in car insurance policies?
No, a voluntary deductible is optional. Unlike compulsory deductibles, it’s chosen by the policyholder to lower car insurance policy premiums.
3. Who should opt for a voluntary deductible in car insurance
Safe drivers with fewer claims can benefit from voluntary deductibles, lowering car insurance policy premiums.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. 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.