Facts About Voluntary Deductible in Car Insurance

Car insurance in India is broadly classified into three types - third-party, own damage, and comprehensive insurance. While third-party insurance is legally mandatory, a comprehensive plan offers wider protection against theft, accidents, and damages. However, its higher premium can be a deterrent for many. To make premiums more affordable, the concept of a voluntary deductible was introduced. 
 

In this blog, we will explore key facts about voluntary deductibles in car insurance and whether they can help you save on your premium costs.

A voluntary deductible in car insurance is a part of the claim money that a policyholder chooses to pay on his behalf, while the insurance company can reimburse the remaining amount. This helps to reduce the policyholder’s regular premium payments.

Now, there are compulsory deductibles in car insurance as per the insurance policy, however, voluntary ones totally depend on the policyholder’s choice. This decision can be economical for some people, while some might face losses depending on some factors and the driving environment. We will know about them in detail further in this blog.

Many factors and reasons influence a policyholder's decision to choose or not choose a voluntary deductible in their car insurance. However, here are a few facts about voluntary deductibles that you should know before making your decision.

Opting for a voluntary decision is not beneficial for all types of policyholders. It can be beneficial for some, while some might face losses. Here are some factors which you should consider while making your choice for it.

Let’s understand how voluntary deductible works in car insurance using an example:

Mr. Kumar has a Comprehensive Car Insurance Policy with a component of Rs. 20,000 as voluntary deductibles. His car gets damaged in an accident that results in an expense of Rs. 70,000. Now, when Mr. Kumar files a claim, he will get a reimbursement of Rs. 50,000 as the remaining amount is declared as deductible by him and needs to be borne from his pocket. 

Apart from voluntary deductibles, another common type of deductible in car insurance is the compulsory deductible or involuntary deductible. This is a fixed amount that the policyholder must pay out of pocket when filing a claim, regardless of fault. It is mandated by the insurance company and cannot be changed by the policyholder. Unlike voluntary deductibles, which are chosen to lower premium costs, the compulsory deductible is set by the insurer based on several factors. It ensures both insurer and policyholder share claim responsibility and promotes safe driving.

Let’s take a look at the difference between Voluntary and Compulsory Deductibles in Car Insurance:

Some of the benefits of choosing voluntary deductibles are as follows:

Listed below are a group of people who should opt for Voluntary Deductibles:

Overall, a Voluntary deductible is a great feature in car insurance. It provides flexibility to people who want comprehensive car insurance but at a lower price. However, you must remember, it is not an economic decision for all. Make a detailed analysis of all the possibilities, your personal traits, and your financial condition, and make your decision.