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5 Crucial Facts About Voluntary Deductible That Every Car Owner Should Know

Written by Sumit Arora
Updated On Oct 16, 20232 min read
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Read this article to find out about the Voluntary deductibles that are absolutely essential for every car owner to know to buy the right car insurance policy.

When it comes to purchasing a car insurance policy, everyone strives to obtain adequate coverage at a reasonable premium. However, there are many options for lowering the premium amount, but among many, the voluntary deductible appears to be a good way to lower your car insurance premium, but it is never recommended. It reduces the amount of premium paid, but it may increase your burden during the claim process. To reap its benefits, you must first learn and comprehend it thoroughly. 

5 Crucial Facts About Voluntary Deductible That Every Car Owner Should Know

What Are Deductibles in Car Insurance?

Essentially, a deductible is the portion of monetary loss that the policyholder must bear at the time of claim. Deductibles are divided into two categories: compulsory deductibles and voluntary deductibles. 

The mandatory deductible is determined by insurers in accordance with IRDAI guidelines, based on a number of factors, the most important of which is the engine capacity of the vehicle. According to the Indian Motor Tariff, the mandatory deductible for cars is Rs. 1000 for cars with less than 1500cc engines and Rs. 2000 for cars with more than 1500cc engines. If your car is quite old, has a higher cubic capacity, or has other conditions that increase the risk of a claim, your car insurance company may ask you to pay a higher amount of mandatory deductible. The amount of the premium is never reduced due to mandatory deductibles, and it is calculated based on factors such as the IDV of the car, its make, model, and variant, among others.

A voluntary deductible is a portion of an insurance claim that policyholders agree to pay ahead of time before submitting a claim to the insurance company. The policyholder agrees to this amount in the car insurance policy documents, which is based on his requirements and affordability. The higher the voluntary deductible, the lower the amount of car insurance premium, as well as the higher the discount.

Facts You Should Remember About Car Insurance Deductibles

The following are the points that you should keep in mind while deciding the amount you dedicate to your voluntary deductible- 

  • ChooseThe Voluntary Deductible Wisely 

Only choose the voluntary deductible up to the amount you can afford at the time of claim, as you will not be able to back out. The higher the deductible, the lower your premium, but the higher the amount to be paid at the time of claim. Paying too much amount for a voluntary deductible contradicts the purpose of investing in a car insurance policy. Thus, make sure to put in the amount only which you can afford. 

  • More Beneficial For Responsible Drivers 

The voluntary deductible is more advantageous for people who are excellent and skilled drivers. If you have good experience in driving, you will also be aware of the risks of driving which will make you a safe and alert driver. This will greatly reduce your chances of filing a claim, which will ultimately help you save money. 

  • The Compulsory Deductible Can't Be Eliminated

When you file a car insurance claim, you must pay for both the compulsory deductible and the voluntary deductible you choose. In short, opting for a voluntary deductible does not exempt you from paying the mandatory deductible.

Take Away

When purchasing a car insurance policy, you should make an informed decision based on the voluntary deductibles because they can help you save money but can also cause you to lose money if not chosen based on your budget and needs. As a responsible driver with a good income, you can easily choose higher voluntary deductibles to enjoy a lower premium. However, if you have observed your tendency to be involved in accidents while driving,  it is best to avoid it or choose it with a lower amount.

Also Read: 

All About Car Insurance Frauds In India

How to Cancel A Car Insurance Policy and Receive A Refund?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

Disclaimer

This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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Written by Sumit Arora
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 Sumit is an insurance industry veteran with more than 20 years in the industry. Sumit is a frequent columnist and speaker at major insurer conventions and is a heard name in insurance circles In his free time, Sumit likes to spend time with his family and go on trips

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