How Do Car Insurance Deductibles Work?
Protect your car with the right insurance, whether it’s a dream or a necessity. While the Motor Vehicle Act mandates third-party insurance, it only covers third-party liabilities, leaving your vehicle vulnerable. For comprehensive coverage, safeguard both your vehicle and finances. Comprehensive car insurance ensures total financial protection in case of an unfortunate incident.
What Does A Car Insurance Deductible Mean?
Let us now take a look at what is a deductible. Remember, insurance plans have deductibles, meaning you pay a portion out of pocket when filing a claim. For instance, with a 5% deductible on a Rs 50,000 claim, you pay Rs 2,500, and the insurance covers the rest. However, in reimbursement claims, you must initially cover the entire network garage cost before being reimbursed by the insurance company. You can use a car insurance calculator to calculate the cost of premiums to be paid.
In What Ways Do Car Insurance Deductibles Help?
A higher car insurance deductible reduces the premium, prompting many to opt for increased deductibles for lower costs. This benefits both policyholders and insurance companies by discouraging unnecessary claims.
What Kinds Of Deductibles Are There In Car Insurance?
In car insurance, there are two kinds of deductibles.
- Mandatory Deduction:
The Insurance Regulatory and Development Board of India (IRDAI) sets a mandatory deductible, a fixed sum you must pay. The engine and cubic capacity of the vehicle determine the required deductible. It does not apply to a single third-party car insurance policy; only comprehensive car insurance policies are. Furthermore, a mandatory deductible has no bearing on your car insurance cost. #
- Optional Deductibility:
You can choose the deductible amount for this plan based on your risk tolerance and financial situation. For instance, if you know that you have the financial means to cover up to Rs. 10,000 in an emergency, you can designate that sum as your voluntary deductible to reduce the premium amount. Additionally, you can select the voluntary deductible as a percentage of the total claim amount. For instance, you may set a deductible of 5% of the entire claim amount.
It’s important to remember that the deductible amount or percentage you select will apply to every claim. As a result, you must be sure of your spending limit and level of risk tolerance.
If my deductible exceeds the amount of my claim, what will happen?
Your insurance company will not be responsible for any payments if your deductible exceeds the claim amount. Only once you have paid the deductible will the insurance company become involved.
It would help to consider voluntary deduction only after assessing your risk tolerance and financial situation. It’s advisable to foresee potential hazards and the possibility of filing claims. While choosing a voluntary deductible can significantly lower your premium, you will be responsible for a more significant sum in the event of an unfavourable incident. As a result, you ought to choose a deductible that you can afford. Always make sure you renew car insurance on time. ##
# Visit the official website of IRDAI for further details.
## 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.
