Compulsory and Voluntary Deductible in Bike Insurance

  • Author :
  • TATA AIG Team
  • Published on :
  • 03/09/2022

If you are planning to buy a two-wheeler insurance plan, then it’s vital to consider a few factors, such as the bike’s engine capacity, age, accessories, and everything that impact the premium cost, before you make the final move. Policy deductible is one such essential component that you need to comprehend in apropos of how it impacts the premium cost significantly.

An insurance deductible is a component that you need to pay before the insurer compensates you for the loss while you raise a claim against the policy. Although a comprehensive policy comprises most of the expenses, insurance deductibles are the expenses that you need to pay out of your pocket during the claim.

There are primarily two types of deductibles included in insurance for 2-wheelers—compulsory deductible and voluntary deductible. As per regulations, all two-wheeler insurance policies consist of a mandatory deductible component in their plans. Therefore, do factor in how much you are going to pay to the insurer before you decide on the right insurance plan.

Compulsory Deductible in Bike Insurance

A compulsory deductible is the portion of the claim that is mandatorily deducted by the insurer on each claim raised by you. It is also referred to as a standard deductible that is mentioned in the policy terms of every insurance plan. This amount is already fixed for every bike insurance policy, and it must be paid before the claim is settled by the insurance company. The compulsory deductible for two-wheelers is fixed at ₹100 for every claim raised.

For example, your bike meets with an accident, and the total cost of repairing is around ₹2000. Since the compulsory deductible in two-wheeler insurance is ₹100, you need to pay this amount first, after which the insurer settles the claim amount as per the policy terms.

Voluntary Deductible in Bike Insurance

Voluntary deductibles are discretionary in nature and, thus, can be chosen by a policyholder to be included in the plan over and above the compulsory excess. Contrary to a compulsory deductible, which is preset by the Insurance Regulatory and Development Authority of India (IRDAI), a voluntary deductible can be chosen from within a specified range. That means, as a policyholder, you agree to pay a particular amount from your pocket in addition to the mandatory deductible during each claim. Consequently, this makes the insurance plan a bit affordable for you.

The best advantage of opting for a voluntary deductible is that you get to buy a two-wheeler insurance policy at a lower premium rate. However, compulsory deductible in motor insurance does not offer any reduction in the premium rates.

Let’s understand how the voluntary deductible works for you with an example.

Suppose you have promised to pay a voluntary deductible amount of ₹2,500 for each claim. This may get you a discount of around 15-20% on the own-damage component of your policy.

Now, if your bike meets with an accident and the repair cost is about ₹12,000, then you would be required to pay ₹2,500 in addition to the compulsory deductible amount of ₹100 before the insurer pays you the rest of the claim amount as per the policy terms.

Thus, if you do not have a history of making claims and are a careful driver, then opting for a voluntary deductible in bike insurance can work in your favour in terms of lower premium rates.

Compulsory Deductible in Bike Insurance Voluntary Deductible in Bike Insurance
You need to pay a fixed amount, which is predetermined by the IRDAI, during each claim. Voluntary deductible meaning is that you have promised to pay a certain voluntary amount over and above the mandatory deductible during each claim.
It is also referred to as compulsory excess, which cannot be changed or modified. It is also referred to as voluntary excess, which you can opt for within a specified range.
The main objective is here to prevent you from raising minor claims. However, a voluntary deductible offers you a discount on the premium amount of the policy.
In the case of compulsory deductible, the claim amount is comparatively higher. While voluntary deductible urges you to claim a comparatively lower amount and consequently reduces the premium cost of your insurance policy.

Tips to Remember

Here are a few tips to remember in apropos of the deductibles that may help you choose the right policy for your two-wheeler if incorporated wisely:

  • Deductibles are not similar to other policy expenses that are often shared by you and the insurer. You have to pay deductibles from your own pocket before the claim is settled by the insurance company.
  • The voluntary deductible is the amount that you choose to pay, while the standard deductible is predetermined by the IRDAI. So, if you want to know the compulsory deductible is applicable to which vehicles or what is a preset deductible amount for each vehicle, then it is ₹100 for a two-wheeler, while it is ₹1,000 for cars having an engine capacity of less than 1500cc and ₹2,000 for cars having engine capacity of more than 1500cc.
  • You are liable to pay the deductibles only when your claim is approved and not otherwise.
  • When a claim is raised, you have to pay the compulsory deductible notwithstanding whether you opted for a voluntary deductible or not. The mandatory deductible remains active during each claim settlement process.
  • You may choose the voluntary deductible amount from within a specified range, so choose it wisely, for it may affect your financial plans.

Conclusion

So, before you choose the right bike policy for yourself, factor in all the components, including compulsory deductible and voluntary deductible in insurance, that may impact the premium cost of your policy. You may head to the Tata AIG website and compare two-wheeler insurance policies while considering all the essential components in order to evaluate the premium cost that matches your budget. Moreover, if you have a good history of driving safely, then opting for a voluntary deductible can actually work in your favour and fetch you a policy with a lower premium rate. To add to all the information, make sure you read the policy document to have clarity about the compulsory deductible in your two-wheeler insurance as well as the voluntary deductible in insurance.

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