Term of the week: Voluntary deductible


Voluntary deductible in car insurance is an amount a policyholder agrees to pay towards future repairs of his/her car, at the time of claim. It is not an extra amount paid over and above the premium amount, but a part of the repairs bill that a policyholder has to bear. The deductible helps reduce the premium outgo for policyholders.

The voluntary deductible amount varies with insurers. For instance, in the case of Reliance General Insurance, if you opt for a voluntary deductible amount of ₹2,500, then you would get a discount of 20 per cent on own damage premium of the vehicle, subject to a maximum of ₹750. Suppose, your third-party premium is ₹2,000 and own damage is ₹4,500, your total premium out go would be ₹5,750 (₹6,500-7,500).

At the time of claim, the total deductible will include compulsory deductible as well. Thus, you can choose this voluntary deductible limit considering your affordability and the risks your vehicle would likely endure.

Keep in mind that it is optional and you can choose not to take it.

Published on August 11, 2019


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