One of the jargons that you will come across while buying car insurance online is a Deductible. And it will come up more often than not if you want to bring down your insurance premiums by some margin. But what exactly is a deductible and how does it impact your policy premium? Well, here is all that you need to know.
What is a Deductible?
It is a component of car insurance online, which you must pay during claims. They are usually split as compulsory deductible and voluntary deductible.
A compulsory deductible is standardized and decided by the IRDAI based on the engine capacity of a car. If your vehicle’s engine capacity is less than 1,500 cc, the deductible is INR 1,000. And for vehicles with an engine of 1,500 or more, the deductible is INR 2,000.
A voluntary deductible, on the other hand, is something that you decide to pay for any future repairs while paying the premium. And it is this component that helps you reduce the premium, should you buy your vehicle insurance online.
How It Works
Should you opt for a higher voluntary deductible, the discount available will be higher as well. For example, if you opt for a voluntary deductible of INR 2,500 in your car insurance online, you would be eligible for a discount of 20% of the own damage component up to a maximum of INR 750. But do keep in mind that you will have to shell out the deductibles every time you send your car for repairs or claim your policy.
Let us take an example. If you have a car that has an engine capacity of less 1,500 cc and have opted for a voluntary deductible of INR 2,500, you will end up paying INR 1,000 (compulsory deductible) + INR 2,500 = INR 3,500. This is the minimum amount that you will have to pay in order to get your claims.
The voluntary deductible is for drivers who are extremely cautious or are confident of their driving skills. If you are a safe and cautious driver, the chances of claims are relatively lower. Since the chances of claims are lower, you will be actually saving money on your insurance policy.
While opting for a voluntary deductible in your vehicle insurance online, opt for an amount that you can pay if there is a claim. There is no point of opting a very high deductible to get discounts, which you will later on, struggle to pay.
Do not confuse a voluntary deductible with a no-claims bonus. While they work in conjunction to help you pay lower insurance premiums, they are not one and the same. An NCB discount comes into the picture when you do not claim your policy, whereas a voluntary deductible is an amount that you pledge to pay during claims.
Do not think of voluntary deductible as a one-time payment system. You do not pay any amount up front. It is just an amount that you agree to pay during claims. And the same lasts only till the current policy lasts. If you were to renew the same policy, you have the option and choice of revising the amount again.
And most importantly, do not overcommit when it comes to opting for voluntary deductibles. A higher voluntary deductible reduces your insurance premium for sure. However, in the unfortunate event of an accident, you might have to claim your policy and the higher deductible might hurt you in such times.
When you are buying your policy online, do not opt for the cheapest policy available. A third-party car insurance is usually the lightest on your wallets, but it doesn’t offer extensive coverage.
Also, the voluntary deductible component is not valid on a third-party car insurance policy as well. Thus, choose your voluntary deductible carefully, so as to strike a balance between lower premiums and amount that you will end up paying during a claim.