Know Everything about Deductibles in your Motor Insurance Policy

Your motor insurance policy ensures that you stay protected financially in case you face a grim situation like theft/accident of your vehicle. A comprehensive motor insurance policy covers you for:

• Loss/damage to your vehicle due to natural calamities such as lightning, earthquake, flood, typhoon, hurricane, storm etc.
• Loss or damage to your vehicle due to unfortunate incidents such as burglary, theft, accident, riot, strike etc.
• Personal Accident (PA) cover with coverage of INR 2 lakh (in case of four-wheeler) and coverage of INR 1 lakh (in case of two-wheeler) for the owner-driver.
• Third Party (TP) legal liability that might result due to damage caused to third party (people/property) by your vehicle.

You can add more value to the coverage provided by your comprehensive motor insurance policy by choosing appropriate add-on covers with your motor insurance plan. The next question that might have popped up in your head might be, so, what is the cost of a typical motor insurance policy? And, what are the factors that define your motor insurance premium? You can use our free motor insurance calculator, and calculate an estimated value of the premium amount that you need to pay towards your motor insurance policy. The premium of a motor insurance policy depends on the following factors:

• IDV (Insured’s Declared Value) of your vehicle
• Deductibles
• NCB (No Claim Bonus), if applicable
• Liability premium of your vehicle, which can vary every year
• Cubic capacity (cc) of the vehicle
• Geographical zone
• Add-on covers (Optional)
• Accessories that you have used in your vehicle (Optional)

While most of these terms are self-explanatory, you can read about them in detail on our blog – Demystify Insurance. Let us discuss here about deductibles in motor insurance. So, deductible is the amount that is paid by you, at the time of claim, out of your pocket. In India, there are two types of deductibles:

1. Compulsory deductible – IRDAI (Insurance Regulatory and Development Authority of India) has decided the minimal amount of the compulsory deductible, which you need to pay at the time of claim:
   • For Private Car (up to 1500 cc) – INR 1000
   • For Private Car (above 1500 cc) – INR 2000
   • For Two Wheeler (irrespective of cc) – INR 100

Your insurance company might charge a higher compulsory deductible, if your vehicle represents a higher risk of claims.

2. Voluntary deductible – This is the amount that you choose to pay at the time of every claim, in order to gain additional discount, while buying/renewing your motor insurance policy. This amount is over and above the compulsory deductible. For e.g., if you choose a voluntary deductible of INR 7500 for your private car, then you are eligible to earn a discount of 30% on your premium amount, with the maximum limit of the discount being INR 2000. Similarly, for your two wheeler, if you choose a voluntary deductible of INR 1000, then you are eligible to get a discount of 20% on your premium amount, with the maximum limit of discount being INR 125.

Now you must be wondering whether to opt for a high deductible insurance plan or low deductible insurance plan. Worry not! We are here to help you out. While you can’t do anything about the compulsory deductible, you can choose the voluntary deductible wisely. You should choose a suitable amount of voluntary deductible, so that you earn a great discount on your premium amount and at the same time reduce your out of pocket expenses when filing a motor insurance claim. We recommend that you should choose a deductible not only to earn discount on premium amount as, it may happen, that you need expend more than you have thought when you take your damaged vehicle for repair and claiming the same against your motor insurance policy. We hope that you now know everything about deductibles in your motor insurance policy. Please leave a comment below if you have more doubts. We will make sure to answer all your queries at the earliest. Visit our website, Bajaj Allianz General Insurance to know more about motor insurance and related topics.