5 Essential Facts About Voluntary Deductible in Car Insurance

When buying or renewing car insurance, most people focus on premium cost, coverage options, and add-on benefits. But there's one little detail that people often overlook—the voluntary deductible. When you explore new car insurance options or want to customise your existing coverage, it is crucial to understand what a voluntary deductible means and how it can affect your coverage and premium cost. Here are some key facts about a voluntary deductible in a car insurance policy.

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What is a Voluntary Deductible in Car Insurance?

A voluntary deductible in car insurance is the amount you agree to pay out of your pocket when you raise a claim against your motor insurance policy. This in exchange for a lower premium. Your insurance provider covers the remaining amount as per policy terms.

For example:

Your repair bill after an accident is Rs. 20,000.

Now, if you've opted for a voluntary deductible of Rs. 5,000 in your four-wheeler insurance, you'll have to pay this amount first, and the remaining amount, i.e., Rs. 15,000 will be covered by your insurer.

How Does Voluntary Deductible Help in Reducing Car Insurance Premiums?

A voluntary deductible in car insurance helps you lower your premium. Insurers offer you coverage for a lower premium because you reduce their liability by agreeing to pay a part of the claim amount. Here's the table showing the approximate discount you get on your car insurance premium when you select a voluntary deductible:

*Note: Voluntary deductible is not available for third party car insurance. Actual benefits may vary slightly by insurer, car make & model, and the type of policy.

Voluntary Deductible vs Compulsory Deductible in Car Insurance

A comprehensive car insurance policy in India comes with a compulsory deductible—a fixed amount you must pay during a claim, no matter what. For private cars up to 1500cc, it's Rs. 1,000; for cars above 1500cc, it's Rs. 2,000. These amounts are set by the IRDAI (Insurance Regulatory and Development Authority of India).

On the other hand, voluntary deductibles are optional in a motor insurance policy. You choose the amount at the time of buying or renewing your policy. It's an additional layer of cost-sharing that can help reduce your premium.

5 Important Facts About Voluntary Deductible in Car Insurance

Here are the five crucial facts about voluntary deductibles in car insurance that every vehicle owner must know:

1. You Need to Pay the Voluntary Deductible Only if You File a Claim

   You must pay the voluntary deductible amount only if you claim against your car insurance and not unless the claim is approved by your insurer. Upon approval, you have to pay the voluntary deductible amount at the workshop and your insurer will settle the remaining amount.

2. Voluntary Deductible is not the Same as Co-Payment

   It's a common misbelief that a voluntary deductible and a co-payment are the same. However, this isn't true. While a voluntary deductible is a fixed amount a policyholder has to pay at the time of claim, co-payment is a percentage of the claim amount that is borne by the policyholder.

3. Voluntary Deductible is not an Additional Expense

   Many believe that a voluntary deductible is an extra cost a vehicle owner has to bear. However, this is not true. When you opt for a voluntary deductible on your car insurance policy, you simply adjust how much you are willing to pay at the time of claim. Selecting a voluntary deductible is a choice and totally depends on the vehicle owner.

4. Compulsory Deductible is not Eliminated Even if you opt for Voluntary Deductible

   Opting for a voluntary deductible on your car insurance policy does not mean that you get rid of a compulsory deductible. In this case, you're required to pay the sum of both the compulsory deductible and the voluntary deductible at the time of a claim.

5. Opting for a Voluntary Deductible is not Always Beneficial

   It's not necessary that if you select a voluntary deductible, it will always benefit you. While a voluntary deductible is useful for those who never make a claim, it can be unfavourable for those who live in an accident-prone zone or make frequent car insurance claims.

Benefits of Voluntary Deductible in Car Insurance

When you choose a voluntary deductible with your four-wheeler insurance policy, you enjoy these benefits:

• Lower Premiums: The biggest advantage of opting for a voluntary deductible in your car insurance is that you can save money on your insurance premiums.
• Best for Safe Drivers: If you have a safe driving record and rarely make claims, you can significantly save on your car insurance premium costs.
• Discourages Minor Claims: You can also retain your No-Claim Bonus (NCB) when you pay for small repairs from your pocket. If you do not make any claim in the policy year, your insurer will offer you NCB, which is a discount on your car insurance premium price.

How to Choose the Right Voluntary Deductible Amount?

To choose the right amount for a voluntary deductible in your car insurance policy, you should consider the following parameters:

• Consider Your Driving Behaviour: Before you decide on the amount for voluntary deductible, it is a great idea to consider your driving history. Do you have a claim-free record, or have there been multiple accidents? If you think you are a safe driver, you can select a higher voluntary deductible for long-term savings.
• Review Your Finances: You should consider how much you can afford to pay out-of-pocket in case of an accidental damage to your car. It is crucial that your deductible amount fits with your budget.
• Talk to an Insurance Advisor: Another way to determine the right deductible amount is to consult with a licensed insurance advisor. This can help you in clarifying the implications of different deductible choices.

In Conclusion

A voluntary deductible is a useful feature of a car insurance policy that can help you lower your premium cost. However, you should only opt for it once you understand the risks. Otherwise, you could end up paying more in case of an unfortunate accident. Make sure to choose the right deductible amount while buying or renewing car insurance online. This will provide you with both flexibility and savings—without affecting your no claim bonus in car insurance.