Motor or Auto Insurance is one of the most important and beneficial scheme that has been launched in automobile industry. If you buy a new car, then along with your car papers, the authorized dealer also make you sign the insurance papers. Now it’s up to you whether you go for a third party liability insurance or comprehensive car insurance. Well, I will recommend you to always take comprehensive car insurance plan as it provides coverage for not only the third party for also for any damage caused to your own car. Yes, the premium rate is comparatively high but in case of any damage or loss, your pocket won’t be burdened.
But do you know that you can even reduce your premium amount. There are lots of factors that determines the premium, just research on them and get discount on premium. One of the factor is Compulsory and Voluntary deductibles. In this article, I will be discussing with you what are Compulsory and Voluntary deductibles and their effect on car insurance premium. Stay tuned with us. Let’s get started.
What is Compulsory and Voluntary Deductibles?
There are basically two types of deductibles namely – Voluntary deductibles and compulsory deductibles.
Compulsory Deductibles in Car Insurance
It is the amount fixed by the insurer that the policy holder has to pay compulsorily whenever he or she files for the claim. As per the norms of IRDAI, the compulsory deductible may vary from Rs. 0.50 for two wheeler from Rs 500 for four wheeler. However the charges may vary depending upon the condition of your vehicle. For example if your car is old there is high risk, so the deductible charged is high. One cannot lower the compulsory deductibles. The premium is decided on the basis of IDV, model of the car, etc.
Voluntary Deductibles in Car Insurance
It is the amount of money that the policy holder chose to pay from his own pocket on his own will. The amount depends upon the policy holder affordability and the risk he is exposed.If you pay a higher amount of voluntary deductible, it lowers the premium amount. For Example – ICICI Lombard gives 20% discount on the voluntary deduction of Rs. 2500.
Compulsory Deductibles Vs. Voluntary Deductibles
|Compulsory Deductibles||Voluntary Deductibles|
|Fixed by the insurer||It is chosen by policyholder|
|It is compulsory||It is not mandatory and optional|
|It has no effect on the premium amount||These deductibles lowers the premium amount|
|While taking claim, only compulsory deductibles are needed to be paid||While taking claim, policy holder has to pay both voluntary and compulsory deductibles which is quite higher|
The most important thing to note is that deductibles are provided only with Comprehensive car insurance policy. Deductibles are provided in the view to lower the incidence of claims. On the other hand compulsory deductibles discourages the policy holders to file for the small claims.
Similarly Voluntary deductibles also discourages the policyholder to file for any claim as they have to pay a certain amount at the time of taking the claim.