Team AckoSep 20, 2021
If you are looking for bike insurance, it is important to understand what deductibles mean for you and your policy. You may be familiar with deductibles but might not fully understand how it impacts your policy and your claim against it. Keep reading to learn about two important types of deductibles: compulsory deductible and voluntary deductible in bike insurance, and their differences.
An insurance deductible is the portion of the claim you pay before ACKO pays the rest of the amount. The only time you have to pay the deductible is when you raise a claim against your policy. When searching for the right insurance plan for your bike, always factor in how much you will pay and what is covered.
If you meet with a bike accident, ACKO will help cover the cost of damages after you pay the required deductible. Let us better understand the term with an example.
Mr. A met with a bike accident, and the bike has suffered significant damages. The repair cost is Rs. 10,000. The insurance deductible stated in the policy is Rs. 1,000. Hence, you need to pay Rs. 1,000 from your pocket and ACKO will pay the remaining claim amount up to the limits mentioned in the insurance plan
A compulsory deductible for bike insurance is that portion of the claim amount that is mandatorily deducted by ACKO on each claim you raise. Claims are settled after deducting the compulsory deductible. Let us understand it with an example.
Example: Suppose your bike repair costs Rs. 2,000, and since the compulsory deductible is Rs. 100, then ACKO will deduct Rs. 100 and pay the remaining claim amount up to the limits mentioned in the policy.
Here is a table with the premium for compulsory deductible based on the type of vehicle and their engine capacity.
|Engine capacity||Discount rate|
|Cars with less than 1500cc||Rs. 1,000|
|Cars with more than 1500cc||Rs. 2,000|
Here are the facts about compulsory deductibles in two-wheeler insurance.
A compulsory deductible is mandatory: All policies will have a compulsory deductible, and as a policyholder, you must bear the portion of the compulsory deductible while paying the repair bill.
The amount is non-customisable: You cannot change or modify the compulsory deductible amount in the policy.
Avoids minor claims: It deters you from raising minor claims since you have to pay from your pocket towards the compulsory deductible.
Fixed price: The amount is determined by the Insurance Regulatory and Development Authority of India (IRDAI) and it is currently fixed at Rs. 100 for two-wheelers.
Unlike the compulsory deductible, the voluntary deductible is optional. It is the fixed amount you are volunteering to pay from your pocket for future repairs of your bike apart from the mandatory compulsory deductible.
Since you opt for the voluntary deductible, you get to buy the bike insurance policy at a lower premium. Higher the deductible, the higher the out-of-pocket expenses. Please note, in the case of compulsory deductible, the premium amount does not decrease. Here is an example to understand the concept of voluntary deductible.
Example: You have decided on a voluntary deductible amount of Rs. 2,500 for your bike insurance for an annual premium of Rs. 3,500, which otherwise would have cost you Rs. 4,500 for a plan without a voluntary deductible.
In case you meet with a bike accident and the repair bill is Rs. 12,000, you have to pay the voluntary deductible amount of Rs. 2,500 and appropriate compulsory deductible amount. ACKO will pay the remaining claim amount up to the limits mentioned in the policy.
The premium that you pay for your bike insurance is based on Third-party coverage and damages to your vehicle. While the Third-party Policy (TP) covers third-party liability, the Own Damage (OD) cover protects you against damages to your bike. Here is a table with the discount on Own Damage premium based on the voluntary deductible amount.
|Voluntary deductible (Amount)||Discount rate|
|Rs. 2,500||20% and a maximum of Rs. 750|
|Rs. 5,000||25% and a maximum of Rs. 1,500|
|Rs. 7,500||30% and a maximum of Rs. 2,000|
|Rs. 15,000||35% and a maximum of Rs. 2,500|
Here are important facts about voluntary deductibles in bike insurance.
Pay the voluntary deductible only if you file a claim: You are liable to pay this deductible only when you raise a claim against your policy. Also, you are not liable to pay the amount unless the claim is approved. Once the claim is approved, you must pay the voluntary and compulsory deductibles at the repair shop. ACKO will pay the remaining amount based on the limits mentioned in the insurance policy.
Compulsory deductible remains intact: When you opt for a voluntary deductible, the compulsory deductible remains active. During claim settlement, you must pay both the compulsory and voluntary deductibles.
Not the same as copay: The voluntary deductible and copay are not the same. While the former is a fixed amount, the latter is a percentage of the claim amount you have to pay from your pocket and is usually associated with health insurance. Also, ACKO will pay the claim amount only if the repair costs exceed the deductibles.
Not always beneficial: Not all riders or policyholders can benefit from the voluntary deductible. While it is useful to riders who never raise a claim, it is not helpful for those who ride the bike in accident-prone areas or submit frequent bike insurance claims.
Here is a table that highlights the difference between compulsory and voluntary deductibles.
|Parameters||Compulsory deductible||Voluntary deductible|
|Meaning||The policyholder must pay a predetermined amount during claims.||The policyholder may have to pay the predetermined voluntary amount during claims.|
|Also referred to as||Compulsory excess||Voluntary excess|
|Customisation||Cannot change/modify||Can change/modify|
|Objective||To discourage you from raising minor claims.||To reduce the premium amount of the policy.|
|Premium||Standard and the IRDAI regulates the cost of it.||Comparatively lower and it’s only on the Own Damage component.|
|Claim payout||Comparatively higher||Comparatively lower|
A voluntary deductible is not complex to understand if you know the facts over myths. Here are a few common misconceptions about the voluntary deductible.
It is a waste of money: If you are a good rider and careful while riding the bike you avoid accidental damages to the bike and end up not raising claims during the policy period. Hence, opting for the voluntary deductible results to lower insurance premiums, can be considered.
It is the same as No Claim Bonus (NCB): No, it is not the same as the NCB. NCB is a reward for not raising a claim during the policy period and goes up to 50% for not making claims for 5 consecutive years. However, a voluntary deductible is a fixed amount you have to pay while settling claims.
Same as copay: A copay is the percentage of the claim amount you need to pay from your pocket, while the voluntary deductible is a fixed amount that you need to pay from your pocket during claims. Also, a copay is usually associated with health insurance.
Here are some commonly asked questions about compulsory and voluntary deductibles.
Is it better to opt for a higher voluntary deductible or excess?
The higher the deductible, the higher the claim amount you have to pay. Hence, it is essential that you carefully choose the right deductible so that you do not have to pay a higher claim amount. However, if you do not raise any claims, you can opt for a higher deductible to reduce the insurance premium.
Can I opt for a voluntary deductible while I purchase or renew my Third-party Insurance Policy?
No, you cannot opt for the deductible. It is available only with the bike's Own Damage Cover. Hence, you need to opt for it when you purchase the Comprehensive Insurance Policy.
Do I have to pay a voluntary deductible if the accident was not my fault?
A voluntary deductible or excess is applicable only in the case of Own Damage component. In case the damage was not your fault, you may have to take it up with the person who caused the damage to your bike.
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