Car insurance deductible


#1

Is large deductible better than small deductible when going for an automobile insurance?


#2

Hi,

Before we answer your question, you must understand deductibles. As you might know, deductible is a certain amount that you pay from your pocket to take care of the damages. There are two types of deductibles—voluntary and compulsory.

Compulsory deductible is that part of the damages that you’re supposed to pay from your pocket (compulsorily) before the insurance company can pay for the rest. This concept is applicable to every policyholder, irrespective of the policy they’ve opted for. Don’t worry! This has no impact on the premium you’re supposed to pay for your policy.

The compulsory deductible amount is most likely to be fixed for your policy. For instance, if you’re supposed to pay Rs. 2,000 towards compulsory deductible, you’ve to pay that irrespective of the extent of damages. The rest, of course, would be paid by your insurer.

Voluntary deductible is the part of the damages you volunteer to pay in case of damage to your vehicle. Since you get to decide the exact amount, keeping factors like affordability and risk in mind becomes necessary. Instead of impulsively choosing the amount, you must take some time and ponder over other expenses for the month. Before taking a decision, you need to set your priorities right.

The more you pay as the voluntary deductible, the better discount rates you can avail. Although, these discounts vary according to the insurers and their policies, you’re more likely to get attractive offers on the premium.

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Cheers,
BB Expert