What are the different types of deductibles in car insurance?
There are two types of deductibles in car insurance
1. Compulsory deductible:
A compulsory deductible is a fixed amount, imposed by the Insurance Regulatory and Development Board of India (IRDAI), that you must pay. The compulsory deductible varies with the car’s engine and cubic capacity. It is applicable only for a comprehensive car insurance policy and not for a sole third-party car insurance policy. Also, a compulsory deductible does not affect your car insurance premium.
For cubic capacity up to 1500cc, the compulsory deductible is set at Rs 1000. For cubic capacity above 1500cc, the deductible is set at Rs 2000.
2. Voluntary deductible:
With this type of deductible, you have the right to choose the amount of deductible as per your budget and risk-taking ability. For example, suppose you know you can afford to pay up to Rs 10,000 in case of uncertainty, you can choose it as your voluntary deductible amount to save on the premium amount. Moreover, you can choose the voluntary deductible in the form of a percentage of a claim amount. So, for example, you can choose to pay 5% of the claim amount as a deductible.
However, it would be best to keep in mind that the amount or percentage of deductible that you choose remains constant for all your claims. Thus, you need to be sure of your budget and how much risk you can afford.
What will happen if my deductible amount is more than the claim amount?
If your deductible amount is more than the claim amount, your insurance company is not liable to pay anything. Hence, your claim will not be accepted. The insurance company will come into the picture only after you have paid the deductible.
To conclude
It is advised to opt for voluntary deductible only after analysing your budget and risk capacity. You should also anticipate any possible risks and likelihood to make claims. Although voluntary deductible can reduce your premium substantially, you will have to pay a higher amount in case of an unfortunate event. Therefore, you should opt for a deductible you can pay easily.