Compulsory and voluntary deductibles in car insurance
Compulsory deductible & voluntary deductible in car insurance
Car insurance deductibles are an important part of any auto insurance policy. Deductibles are the amount of money you have to pay out-of-pocket before your insurance company pays for any damages following an accident or other covered loss. There are two types of deductibles: compulsory and voluntary.
In this article, we will discuss what these deductibles actually mean, as well as the differences between compulsory and voluntary deductibles.
What is a compulsory deductible?
When you get car insurance, a compulsory deductible is provided to you. Compulsory deductibles in car insurance are the mandatory amount that the insured needs to pay from the total claim amount. The mandatory deductible is set to Rs. 1,000 for automobiles with an engine capacity of less than 1500 cc as well as Rs. 2000 for vehicles with more than 1500 cc, according to IRDAI guidelines.
What is a voluntary deductible?
As the name implies, this form of deductible in vehicle insurance is optional, and you may choose how much you are willing to spend out of pocket to fix losses to your vehicle. Selecting a voluntary deductible for your auto insurance policy lowers your premium amount; nevertheless, your out-of-pocket expenditure rises after a claim.
Compulsory vs voluntary deductible
Car insurance is a type of insurance that provides coverage for damage to vehicles, as well as for any injury or death caused by using a vehicle. When signing up for car insurance online, it is important to understand the differences between compulsory and voluntary deductibles.
Compulsory deductibles are fixed amounts that must be paid by the insured before the insurer pays out a claim. Voluntary deductibles are higher amounts that the insured can opt to pay if they want to reduce their premium costs.
Compulsory deductibles are typically lower than voluntary deductibles and may be subject to regulations in some countries. On the other hand, voluntary deductibles are not regulated and can be set by the insured depending on their budget.
Both types of deductibles reduce the amount of money an insurance company needs to pay out in claims, so it is important to understand which type of deductible is right for you.
To sum it up,
Compulsory deductible | Voluntary deductible |
Mandatory amount of deductible fixed by IRDAI | Amount chosen by the policyholder |
Offers no change in premium | Lowers the premium amount. |
Only the compulsory deductible needs to be paid during claims. | Both voluntary and compulsory deductible needs to be paid during claims. |
Conclusion
When looking to compare car insurance online, a good place to start is with the deductible. Voluntary deductible amounts are particularly interesting since allowing insurance companies to absorb more of the claim amount can ultimately lower the price of your premium. However, you should also consider compulsory deductibles, as they are required regardless of your personal preferences. The type of care you drive and your driving record will also play a part in determining which deductible is right for you.
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