Deductibles in Car Insurance

Imagine you have a minor accident, and fixing your car costs ₹10,000. Your insurance might require you to pay the first ₹5,000 yourself before they step in. This initial ₹5,000 you pay is your deductible. It is like a deposit you make before your insurance helps with the repairs.

The higher this deductible amount, the less you pay every month for your car insurance policy. It is a bit of a bargain: lower monthly payments now, but more money coming out of your pocket if your car gets damaged.

Car insurance typically involves two types of deductibles. We will learn more about these deductible types in four-wheelers and their implications on the claim amount.

When it comes to deductibles in car insurance, there are two main types to consider:

• Compulsory Deductible in Car Insurance: This one is mandatory and set by the Insurance Regulatory and Development Authority of India (IRDAI). The amount depends on your car's engine size.

  Cars with engines under 1500 cc have a ₹1,000 compulsory deductible, while bigger engines have a ₹2,000 deductible. A compulsory deductible is applicable to all claims, which means you always pay this amount irrespective of any voluntary deductible you choose.

• Voluntary Deductible in Car Insurance: Here, you have some control. You can choose a higher voluntary deductible amount to bring down your monthly insurance premium. The trade-off is that you will have to pay more out of your pocket if you need to make a claim.

  Let us say you pick a ₹5,000 voluntary deductible on top of the compulsory deductible. In a ₹10,000 repair scenario, you'd pay ₹6,000 (₹1,000 compulsory + ₹5,000 voluntary) and your insurer would cover the remaining ₹4,000.

  Remember, choosing a deductible is a balancing act. A higher voluntary deductible saves you money on premiums but increases your out-of-pocket expense in case of a claim.

Also Read: How to Lower Your Car Insurance Premium

As stated above, the deductible is the portion of the claim amount that the policyholder must pay at the time of settling a claim.

Now, let us look at the differentiating factors that distinguish Compulsory Deductibles in car insurance from Voluntary Deductibles:

So, once you have chosen a robust car insurance plan with the needed add-ons like roadside assistance, loss of personal belongings, zero depreciation car insurance coverage, etc., you must also understand when you should opt for a deductible.

A deductible in car insurance can be a good option for you if you fit one or more of these situations:

• You have a good emergency fund: A healthy emergency fund ensures you can comfortably cover the deductible amount in case of a claim without straining your finances.

• You are a safe driver with a good record: If you have not made claims in the past and are confident in your driving skills, opting for a higher deductible can significantly lower your monthly premium.

• You want to save on car insurance premiums: This is the most straightforward benefit. Choosing a higher voluntary deductible is guaranteed to bring down your monthly insurance costs.

• You have an expensive car: The insurance will cost more if your car is expensive. Choosing a lower deductible could help you save on the premium. Remember, if you do not plan on making small claims to get a no-claim bonus, it is smart to go for a deductible that matches the amount you would not claim anyway.

• Also Read: When Not to File a Car Insurance Claim

Car insurance usually falls into two categories: Third-party and Comprehensive. Third-party insurance covers you for damages caused to others, while comprehensive insurance also protects your own car.

Here is how deductibles work in each:

• Third-party Car Insurance: This type covers injuries, deaths, or property damage to others. Since it does not cover damage to your own car, deductibles are not part of this policy.

• Comprehensive Car Insurance: This provides broader coverage, including repairs for your own car. That is why both voluntary and compulsory deductibles apply to this type of insurance.

Tata AIG offers comprehensive car insurance plans designed to provide a wide range of coverage for your vehicle. These plans aim to financially protect you in case of accidents, theft, and more.

However, it is important to note that making claims for minor damages could lead to higher costs during your car insurance renewal online. Deductibles are introduced to reduce the frequency of claims. It is wise only to claim damages that are costly to repair, as this helps keep insurance costs manageable over time.

With Tata AIG's car insurance plans, you can feel confident knowing that you have robust coverage for your vehicle while also being mindful of managing costs effectively. Our plans offer a balance between comprehensive protection and sensible financial management, making us a smart choice for car owners looking for reliable insurance coverage.

You can further extend your coverage with add-ons like zero depreciation car insurance, engine secure, return-to-invoice, roadside assistance, etc.