covers your car against risks like theft, accident, explosion etc.
Deductible, also called excess is the amount that is paid by the Policyholder before the insurance comes into force. This amount is deducted from the total Claim by the insurance company while processing it for reimbursement. In case of cashless claims, the Deductible part is paid by the policyholder and rest is handled by the insurance company.
While a deductible reduces the chances of claim being raised to the insurance company, it also reduces the Premium for the vehicle owner. Higher the deductible, lesser the premium as a part of the damage will be paid by the vehicle owner. Excesses can be compulsory and voluntary.
It is the amount that is fixed and has to be paid by the vehicle owner before any claim can be made. In India, since vehicle insurance is compulsory, the compulsory deductible is also fixed based on the type of vehicle.
For any vehicle claim raised, this amount is deducted from the claim before Reimbursement or the cashless claim.
Voluntary deductible is the amount that the vehicle owner decides to pay himself in case of a claim. One needs to determine the voluntary deductible part at the time of taking the policy. It needs to be paid only if the claim arises. By taking higher deductibles, one can reduce the insurance premium substantially. Taking high deductibles can also go adverse if it is set too high. One has to bear the deductible amount when the claim arises and if it is too high one may actually loose on all the premium savings.
One needs to be cautious while opting for the voluntary deductible. It needs to be kept at an amount one can easily afford to pay for damages at a given point.