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Understanding Deductibles In Car Insurance For Smart Financial Planning

by Angelina

Car insurance includes premiums, one-time payments securing coverage, and deductibles, the amount paid out of pocket during a claim. This article aims to demystify online car insurance deductibles, highlighting their significance during the claims process.

What Are Car Insurance Deductibles?

In car insurance, deductibles refer to the upfront expenses you bear before the policy covers the remaining claim balance. The Insurance Regulatory and Development Authority of India (IRDAI) regulates the deductible amount, which is often determined based on the vehicle’s engine cubic capacity.

Unlike premiums, car insurance deductibles are not annual; they apply each time a claim is filed. Once the deductible is paid, the insurer covers the remaining claim amount or repair costs. To illustrate, if there’s a ₹1,000 deductible and ₹25,000 damage cap, and your repair costs amount to ₹24,000, you’re responsible for the ₹1,000 deductible, with the insurer covering the rest.

Types Of Car Insurance Deductibles

Two types of deductibles exist in online car insurance: Compulsory Deductible and Voluntary Deductible.

Compulsory Deductible: This type mandates a deductible based on the car’s engine cubic capacity. IRDAI regulations specify compulsory deductible amounts, such as ₹1,000 for vehicles with up to 1,500 cc and ₹2,000 for those exceeding 1,500 cc.

Voluntary Deductible: Policyholders can choose the amount for voluntary deductibles. Opting for a higher voluntary deductible may lower premium costs, but you’ll have a higher out-of-pocket expense during a claim. Selecting a reasonable amount is advisable to strike a balance.

Compulsory vs. Voluntary Deductibles

Obligatory deductibles, set by IRDAI, affect all policyholders uniformly. In contrast, voluntary deductibles, chosen by policyholders, provide flexibility but influence premium costs and out-of-pocket expenses during claims. Mandatory deductibles are unavoidable, while voluntary deductibles are elective.

Deductibles In Various Car Insurance Policies

Car insurance generally falls into two categories: third-party and comprehensive.

  • Third-Party Insurance: A third-party insurance policy covers claims by third parties for injury, demise, or property damage. Deductibles are not applicable in this type as it doesn’t cover losses to the insured vehicle.
  • Comprehensive Insurance:Offering broader coverage, comprehensive insurance covers damages to your vehicle. Obligatory and voluntary deductibles apply here, impacting the claim amount and premium costs.

Choosing Your Car Insurance Deductible

Your deductible choice depends on your comfort and risk tolerance. A higher voluntary deductible lowers premiums but increases claim out-of-pocket costs. Luxury cars may have higher premiums, making a lower voluntary deductible a prudent consideration. ##

Additionally, weigh the impact of filing minor claims on any No Claim Bonus (NCB) received. Align your deductible with the estimated repair cost to avoid compromising your NCB. You can utilise a car insurance premium calculator to estimate the costs of premiums to be paid.  Claims are subject to terms and conditions set forth under the motor insurance policy. *

Choosing the zero dep in car insurance feature eliminates the deduction for depreciation during claim settlements, offering full coverage for repairs without considering the vehicle’s decreased value over time.

Understanding car insurance deductibles is crucial for informed decision-making. Whether dealing with compulsory or voluntary deductibles, recognising their role in the claims process empowers policyholders to navigate the complexities of car insurance.

*Standard T&C Apply

#Visit the official website of IRDAI for further details.

##All savings are provided by the insurer as per the IRDAI-approved insurance plan.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

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.

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