Voluntary Deductible in Car Insurance

As the name suggests, a voluntary deductible is the amount that an insured opts to pay voluntarily at his free will. It is a fixed amount that the policyholder decides to pay out of his pocket (at the time of raising the claim) when buying car insurance.

In the event of an accident, the insured must pay a voluntary deductible before the insurer settles the claim amount. Here is an example to understand the voluntary deductible.

Suppose the repair expenses for the car are ₹10,000, and you have chosen to pay ₹2000 as a voluntary deductible. When you file a claim with the insurance provider, they will pay (₹10,000-₹2,000) ₹8000 as the final claim amount against the repair expenses.

How Voluntary Deductible Helps to Reduce Insurance Premium?

One way to reduce your motor insurance premium is to opt for a voluntary deductible. When you choose to pay the voluntary deductible from your pocket, you reduce the insurer's liability. Thus, the insurer is then entitled to pay a lesser claim, which leads to a reduction in the premium amount.

The voluntary deductible is inversely proportional to the policy premium. It means the more voluntary deductible you are ready to pay, the lesser your insurance premium becomes.

For instance, if you choose to pay a voluntary deductible of ₹2500, you may get a premium discount between 15-20% (approximately).

As opposed to a voluntary deductible, which the insured chooses to pay at his own discretion, the compulsory deductible is mandatorily borne by the insured. Here are the critical differences between compulsory and voluntary deductibles:

Here are the top benefits of voluntary deductible:

• Voluntary deductible reduces the premium amount required to be paid by the insured.

• It works as an incentive for the car owner and encourages him to be more responsible while driving the car.

• The reduction in premium due to the voluntary deductible makes the policy affordable for many customers who may otherwise not be able to afford it.

• The insured can choose the deductible amount as per his budget.

When opting to pay the voluntary deductible, one must carefully assess the factors involved so they can gain the maximum benefit.

• Confident Driving—Individuals who are skilled and cautious drivers and are confident that their chances of making claims are meagre can opt for a high voluntary deductible.

• Staying in a Safe Area—Those who stay in low-traffic, safe areas where the chances of accidents are less can also choose to pay a high voluntary deductible and save decent amounts on insurance premiums.

• Value of the Car—When deciding to opt for a voluntary deductible, one must also consider the value of the car. If you have an expensive car, the premium will be high. Therefore, you can opt for a voluntary deductible to reduce the premium cost.

• Save the No-Claim Bonus—It is crucial to know that making small claims impacts the no-claim bonus you earn. Therefore, to avoid raising claims, opt for a voluntary deductible amount equivalent to minor repair costs.

While a voluntary deductible in motor insurance can be highly effective in reducing the insurance premium, in some situations, it is better not to opt for it.

• If you Can't Afford the Payment- Choose a deductible amount that you can afford. Despite the lower premium amount, remember that you will need to pay the deductible out of your pocket. So, before you opt for the voluntary deductible, ensure you have enough funds or opt for a small amount.

• If you Live in an Accident-Prone Zone- Staying in an accident-prone zone calls for a high insurance premium. There are chances that you may be involved in an accident, and hence, the chances of paying the deductibles are also high.

• **If You Have an Old Car—Insurance providers charge a higher premium for old cars. Therefore, your voluntary deductible may also be high in such cases.

• If You Drive Recklessly- If you are a new or careless driver, you are likely to be involved in a collision. Therefore, you will most likely have to pay the deductible when you file a claim.

As we answered the question, “What is voluntary deductible in car insurance?”, We realised it is a way to reduce your car insurance policy premium. When you choose to pay the voluntary deductible, you are free to decide the amount according to your financial status. Thus, it gives you a lot of flexibility along with a discount on insurance premiums.

Just as a voluntary deductible reduces the insurer's premium cost, zero-dep insurance waives the depreciation cost from the insured when making a claim.

When buying insurance for your four-wheeler, you must select an insurer that provides plenty of benefits to the policyholder. Tata AIG is an excellent insurance provider in the country, offering affordable insurance plans.

Our insurance plans include features like customisable add-ons, easy car insurance renewal online, affordable premiums, no-claim bonus rewards, and much more. We endeavour to offer our clients the best and most cost-effective plans.

Get complete details about our policies by visiting our official website!