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All you need to know about voluntary deductibles in car insurance

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Insurance companies these days are introducing plans that require payment of a portion of the claim amount by the policyholder. These insurance plans are gaining popularity due to the attractive premiums that are offered with it. However, you should be aware of the intricacies of the clauses in such plans to avoid being disappointed at the time of a claim.

Compulsory and Voluntary deductibles:

A deductible is a part of the claim that is not covered by the insurer. This amount is usually mentioned in the policy document, and is borne by the policyholder himself.

This amount needs to be paid by the insured before the policy kicks in and compensates him with the remaining claim amount.

Deductibles can be classified into two types:

  1. Compulsory deductible

    Compulsory deductibles are predefined amounts that insurance companies enforce, in association with IRDA guidelines. The amount corresponding to this deductible is identified by multiple factors, including the capacity of the car’s engine. For private cars, the Indian Motor Tariff has some standardised rates for compulsory deductibles, ranging from Rs. 500 to Rs. 2000.

    The insurance provider may charge you a higher compulsory deductible if your car is a very old one, it has a higher cubic capacity or in other situations where the risk of claim is relatively higher. The premium will not be lowered for compulsory deductibles, and it is usually calculated based on factors like the IDV of the vehicle, its make, and the model.

  2. Voluntary deductible

    Voluntary deductible is a part of the claim amount that the policyholder pays ahead before it is raised to the insurer. This amount is predefined in the insurance by the policyholder, based on his affordability and risk.

    • When you purchase a policy with higher voluntary deductibles, you will need to pay a lower premium. However, it should be noted that when you raise a claim after an accident, you will not be provided 100% of the claim amount.
    • In case you do not opt for voluntary deductibles with your car insurance, you will have to bear a higher premium; but you can be assured of a good payout from the insurance provider at the time of a claim.

Key differences between compulsory deductible and voluntary deductible are as shown below:

Compulsory Deductible Voluntary Deductible
It is a fixed amount decided by the insurance provider This is an amount chosen by the policyholder and is not mandatory
The compulsory deductible does not impact the premium When a policyholder opts for a higher Voluntary Deductible, his premium will be lower, and vice versa
When a claim is raised, the policyholder needs to pay only the compulsory deductible amount, which is usually quite low. When a claim is raised, the policyholder has to pay both the compulsory deductible amount and the voluntary deductible chosen, the total of which will be a substantial amount

Why do insurers provide deductibles?

Deductibles are only a part of comprehensive car insurance policies and are offered by insurers to lower the incidence of claims.

When a policyholder files a claim he will have to bear the compulsory deductibles part, which discourages him from raising smaller claims. Higher levels of compulsory deductibles hence, make drivers more cautious on the roads, so as to avoid damages and subsequent claims.

When a policyholder opts for a voluntary deductible, he will benefit from a lower premium, but will have to share the costs at the time of a claim. This encourages him to drive safely, and avoid accidents and resultant claims.

Summary

When you purchase an auto insurance policy, you have to make a prudent decision on the voluntary deductibles. If you are a cautious driver with a good disposable income, then you can opt for higher voluntary deductibles to benefit from a lower premium. However, if you are a rash driver it is wise to avoid voluntary deductibles altogether, or limit it to a lower amount.

Effectively, you will need to weigh out the advantages of the reduction in premium with the out-of-pocket expenses that will be borne by you at the time of a claim. Based on your specific need, you can customise your policy to make it work in your favour.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

Claim Reviews

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    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    It has been a good insurance policy and the premium has been paying annually. The premium amount has been nominal and the payment method has been easy. I had not yet made any claims so far and there has been cashless garages available as well....
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  • Universal Sompo Car Insurance
    " Good protection for four wheeler"
    0.5 4.0/5 "Great!"
    All policies with Unviersal sompo, whenever I call they respond well on the toll free helpline. The policy covers fully my car compared to other insurer, the beginning it was zero depreciation plan, they gave me the insured declared value.
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    , bangalore
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    "Its Good"
    0.5 4.0/5 "Great!"
    The dealer gave me L & T general insurance policy for my car the premium amount is nominal for the tenure of one year, I have old Tokyo Innova, hence I took comprehensive and third party cover, they do have road side assistance and 24 hours services on time.
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  • ICICI Lombard Car Insurance
    "Good protection for four wheeler"
    0.5 5.0/5 "Blown Away!"
    From ICICI lombard I have taken car insurance for Hyundai I20, first time when I paid the around Rs. 25,000 when it was new car, now recently I paid is around Rs. 17,000 now its been 2.5 years old. The plan is called zero depreciation, with road side assistance, 24 hours services.
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    0.5 5.0/5 "Blown Away!"
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  • Bajaj Allianz Car Insurance
    "Low premium with better benefits"
    0.5 5.0/5 "Blown Away!"
    My both the polices are insured with Bajaj Allianz, I have taken one policy for my Maruthi Ciaz car, I paid the premium was around Rs. 8000, I have taken the comprehensive it covers for the loss, damage, other natural disaster, hence I am fine with them.
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    , new delhi
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  • Tata AIG Car Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I hold a car insurance with TATA AIG general insurance from last 10 months, a premium of Rs 16000 has to be paid for this insurance policy. There was no claim experience so far with this insurance and this policy has full coverage with 0% depreciation.
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    , bangalore
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    "Complete protection with Tata Aig"
    0.5 5.0/5 "Blown Away!"
    I approached Tata Aig through their agent, he have taken initiative to generate the policy on time, I have received the policy document on time, the premium amt around Rs. 11k for one year, I have road side assistance with engine protection, tier cover with best insured value.
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  • Royal Sundaram Car Insurance
    "Good Product"
    0.5 4.0/5 "Great!"
    For my Maruthi car I took Royal sundaram general insurance through dealer I have approached the premium is reasonable, I don't think its a comprehensive plan. Once I had claim I met with the accident, there was a car damage, they gave 70% of claim, remaining I paid from my end.
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    , bangalore
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  • Reliance General Car Insurance
    "GOOD"
    0.5 5.0/5 "Blown Away!"
    RELIANCE GENERAL INSURANCE is the insurer where i have taken my car insurance and the premium i paid which is nominal added on that the IDV value is also sufficient with this policy. The policy coverage is for bumper to bumper for this policy.
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    , hyderabad
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    "GOOD"
    0.5 5.0/5 "Blown Away!"
    I had a claim of 44k with the SBI GENERAL INSURANCE where i have taken the card insurance and the claim is of reimbursement and i got within the one day. The premium is nominal and the IDV is nominal. The coverage is for bumper to bumper. The process is good with this policy.
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    , hyderabad
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  • ICICI Lombard Car Insurance
    "Good Protection for four wheeler"
    0.5 4.0/5 "Great!"
    The car policy with ICICI lombard is good and they are economical on the cost wise, I took policy for one year I took 100% its zero depreciation. They gave me best insured value based on the age of vehicle, they have ncb features and they many service centers too.
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  • Bajaj Allianz Car Insurance
    "Good claim process with fast service"
    0.5 4.0/5 "Great!"
    The premium amt is good in Bajaj Allianz and economical too, I paid Rs. 25k for one year. I have Hyundai I ton card its 3 years old, they gave me best insured declared amount, I got the papers on time, my claim exp is good, car got damaged and replaced and gave it on time, even they have lined with many service centers.
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    , bangalore
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  • ICICI Lombard Car Insurance
    "Quick policy"
    0.5 5.0/5 "Blown Away!"
    I have been renewing the policy for 4 years with ICICI Lombard. The policy was given by dealer when i purchase the policy and i'm continuing the policy without any reason. The claim experience was fine. I have got the coverage amount of Rs. 9 lakhs and i have got the claim amount of RS. 40000. This policy covered with bumper to bumper facility. I have got the claim within 5 days.
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    "Good Car Insurance policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance policy was taken 2 years ago with Universal Sompo. I have been renewing the policy with the same company. I have paid the premium amount of Rs. 4000. This policy has been covered for 100%. They have given me a car value of Rs. 1.90 lakhs.They have offered me a facilities of road side assistance and bumper to bumper. I have no claim experience so far.
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    "Its Good"
    0.5 4.0/5 "Great!"
    Cost of the car policy is good in Bajaj Allianz. I have Maruthi card they best insured value based on the age. I don't have any claim experience. The insurance company gave me Rs. 2.5 lakhs for one year, third party cover and personal accidental cover is good.
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    , bangalore
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  • New India Car Insurance
    "Good Experience"
    0.5 5.0/5 "Blown Away!"
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  • United India Car Insurance
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    0.5 5.0/5 "Blown Away!"
    Since its a new car, they have given me a a zero depreciation policy. The dealer has recommended me about this car insurance policy when i purchase my car. I have paid the premium amount of Rs. 28000. They have not given me a road side assistance facility but bumper to bumper facility is available. More garages are available in my location.
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    , hyderabad
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  • ICICI Lombard Car Insurance
    "Better"
    0.5 4.5/5 "Excellent!"
    My car insurance was taken with ICICI Lombard and it was offered by the showroom. They are giving zero depreciation and don't know about the other offers. The premium is included in the car price. The customer service is good. They have sent the insurance papers on time.
    Was this review helpful? 0
    , new delhi
    Reviewed on Dec 02, 2018
  • review Car Insurance
    "Value of money"
    0.5 4.0/5 "Great!"
    4 years back, i have bought my car insurance policy with Bharti Axa. Somebody suggested me about this car insurance policy. The premium amount is less comparatively less when i compared with other companies. I'm happy about the coverage value they have provided to me. I have not claimed anything in this policy.
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    , new delhi
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