Many people choose a higher voluntary deductible when purchasing car insurance to lower the monthly payment. Although these deductibles will motivate the policyholder to drive safely and avoid filing claims for any minor damages, they will increase the policyholder’s out-of-pocket costs in the event of an accident claim. Deductibles in car insurance are cost-sharing arrangements whereby the policyholder pays a portion of the claim before receiving the insurance claim. ##*
The policyholder must understand the terms and conditions of the deductibles mentioned in the document. There are two types of deductibles: compulsory and voluntary . The policyholder determines the voluntary deductible, while the insurance regulator sets the mandatory one. The deductible is determined by factoring in the cost of the premium and the extent of the coverage. The higher your deductible’s value, the lower your premium will be. ##*
A cost-effective policy typically has a higher voluntary deductible, so the policyholder should only sometimes look for one. The voluntary deductible amount is chosen by each policyholder when they buy the insurance. A policyholder can pay less in premiums over time if his capacity to bear costs is higher at the time of the loss. However, it is best to pick a manageable amount as a voluntary deductible because one might have higher out-of-pocket costs in the event of severe damages. ##*
Compulsory Deductible
According to insurance regulator regulations, all insured vehicles must have a mandatory deductible component in their policies, and the amount will vary depending on the engine size. The mandatory deduction is Rs 1,000 for private cars with engines up to 1499 cc and Rs 2,000 for those with larger engines. The insured pays the compulsory deductible as a fee when a claim is made, so it does not impact the car insurance premium. *
What Amount Should Be Deductible Voluntarily?
Depending on the premium he must pay for the policy and how comfortable he is with paying out-of-pocket expenses in case of a claim, the policyholder must choose the voluntary deductible amount. The voluntary deductible should be selected after considering how the car is used and the risks the insured believes he may face. For instance, you can choose a higher deductible if the vehicle is used less frequently and is exposed to fewer risks. Other things to consider include your driving abilities and the area you typically drive. Make sure you understand whether car insurance is tax deductible or not. *
In particular, if the vehicle is new, one must consider the cost of repairs in the event of damage. You can choose from options and receive concessions if you choose a higher deductible over and above the required deductible. Higher deductibles typically result in greater premium concessions, but you should choose wisely based on the likelihood of damage and the cost of covering it. Therefore, if you choose a higher deductible, make sure that you or the person driving your car is alert and that the vehicle has cutting-edge safety features. Choose comprehensive cover and add-on covers like engine protection, zero depreciation, and vehicle replacement. ##
A car insurance premium calculator is an easy-to-use tool to determine the premium you would need to pay.
* Standard T&C Apply
## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
