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:
Voluntary Deductible | Discount Given By Insurer |
₹ 2,500 | 20% discount on OD premium up to a maximum of ₹750 |
₹ 5,000 | 25% discount on OD premium up to a maximum of ₹1,500 |
₹ 7,500 | 30% discount on OD premium up to a maximum of ₹2,000 |
₹ 15,000 | 35% discount on OD premium up to a maximum of ₹2,500 |