Compulsory Deductible is also known as Compulsory Excess in motor insurance. It is the part of the claim amount which you will have to bear out of your pocket. The amount is decided by the Insurance Regulator.
- For cars not exceeding 1500 cc, the amount is fixed as Rs. 1,000
- For cars exceeding 1500 cc, the amount is fixed as Rs. 2,000
- For two wheelers, the amount is fixed at Rs. 100
Let me explain this with an example:
If your car is damaged and the total claim amount is Rs. 8,000. In case your vehicle is a 1499 cc vehicle, you will have to bear Rs. 1,000 out of your pocket and only the balance amount of Rs. 7,000 will be paid by the insurance company. This is put in place to discourage small claims and encourage good driving.
Voluntary Deductible is also known as Voluntary excess in motor insurance parlance. This is an amount which you promise to pay in case a claim arises. In return you are offered a discount on your premium. By promising to pay Rs. 2,500 you may get a discount of 15-20% on the own damage component of your premium.
In the above example, if you had opted for a Voluntary Deductible of Rs. 2,500 you would have to pay Rs. 1,000 and Compulsory Deductible and Rs. 2,500 and Voluntary Deductible. Hence you’re the payout received by you would be Rs. 4,500 (Rs. 8,000 – 1,000 – 2,500). This is useful for those who are relatively sure of not making claims and hence can save on the overall premiums. If you are a careful driver and don’t have a history of not making claims, this can work to your advantage in terms of lower premiums.
