OneInsure Blog
Post By Joan
What Is An Insurance Deductible?
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Car Insurance
Insurance deductible is the sum that you pay out of pocket for repairing your vehicle following an accident. You have to come up with the money i.e. the deductible before a claim gets made. Deductibles under car insurance can be of two kinds - compulsory deductible and voluntary deductible. Let us look at what they are:
Types of deductibles
Deductibles can be classified into compulsory deductible and voluntary deductible.
- Compulsory deductible - Compulsory deductible is the amount that is mandatorily deducted by motor insurers on every claim that you make. The amount is fixed, depending on the kind of vehicle you own. If your insurance policy has Rs. 1,000 in compulsory deductible, you will have to pay the exact figure every time you make a claim for damages to your vehicle. The remaining sum will be taken care of by the insurance company.
| CC of Vehicle | Compulsory Deductible |
| Up to 1500CC | 1000 |
| Above 1500CC | 2000 |
- Voluntary deductible - Voluntary deductible is the amount you are willing to bear voluntarily in case your vehicle suffers damage in an accident. It is up to you how much you want to pay as voluntary deduction. Keep in mind that the more you pay, the more discount you will get on your car insurance premium. The discount can be availed on your premium's Own Damage part.
| Discount | Voluntary Deductible |
| 20% on OD Premium of the vehicle, subject to a max. of Rs. 750 | 2500 |
| 25% on OD Premium of the vehicle, subject to a max. of Rs. 1500 | 5000 |
| 30% on OD Premium of the vehicle, subject to a max. of Rs. 2000 | 7500 |
| 35% on OD Premium of the vehicle, subject to a max. of Rs. 2500 | 15000 |
What is the purpose of deductibles?
The main reason why motor insurers insist on deductibles is to reduce the instances of claims. People generally become more careful handling their vehicles when they know they are liable to pay for a part of the damages. Deductibles are a means to discourage small claims since one only gets compensation for damage that surpasses the deductible.
If an individual opts to pay a high amount as voluntary deductible to get a better discount on the premium, the individual knows that a filing claims for minor damages can cost them quite a bit. Thus, the individual will drive with more caution and pay careful attention on the road.
Conclusion
Careful planning is a must when you decide on the deductible amount. Often, people opt for high voluntary deductibles to benefit from discounts but have found themselves unable to come up with required cash on time. Don’t hastily determine the deductible amount without taking into consideration your current financial condition, the risks involved and your driving skills.
