What is a Deductible?

In motor insurance, a deductible is the amount the policyholder must pay out-of-pocket before the insurance company pays for a claim. Deductibles are designed to share the risk between the insurer and the insured, reducing the number of small claims and keeping insurance premiums affordable.

Types of Deductibles in Motor Insurance

Two types of deductibles are available in a motor insurance policy. They are as follows…

Compulsory Deductible

This is a mandatory amount set by the IRDAI; it is a fixed value measured based on the cubic capacity of the car engine.

For example, the compulsory deductible for private cars can be ₹1,000 for vehicles with engine capacity up to 1500cc and ₹2,000 for vehicles with engine capacity above 1500cc.The compulsory deductible for two-wheelers is fixed at ₹100 for every claim raised.

Voluntary Deductible

This is an optional amount that the policyholder can choose to pay over and above the compulsory deductible. By opting for a higher voluntary deductible, the policyholder can reduce their premium.