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​When it comes to insurance, there are a lot of things pertaining to coverage and claims that we remain unaware about. This should be avoided since it is always helpful to understand your insurance policy thoroughly so that there you are not distressed during a claim. This holds very true as far as car insurance goes.

In a car insurance policy, there is an important feature called as ‘deductible’ that has a huge impact on claim settlement. Let us understand this feature in-depth so as to get the best out of your car insurance coverage.

To begin with, it is essential to understand what a deductible is. In simple terms, it is th​e amount an insured has to pay in the event of a claim post which the insurance company settles the remaining claim amount. To make things clearer, let’s say you have registered a claim for five thousand rupees. If the deductible of the insurance policy is one thousand, the insurer will only pay four thousand rupees as a claim settlement. You have to pay the remaining one grand out of your own pocket.

The deductible is classified into two types: compulsory and voluntary. The compulsory deductible is something that is made mandatory by the Insurance Regulatory Development Authority of India (IRDAI) in a car policy. It is a fixed amount set by the car insurance company which is determined by the IRDAI directives. This amount is dependent on the engine capacity of your car engine. As of now, the compulsory deductible amount for private cars of 1500 cc and above is two thousand rupees and for ​private cars of 1499 cc and below is one thousand ​rupees. However, there is a catch. The car insurance company can increase this deductible if your car is old. This is due to the fact that the risk and the probability of claims is increased due to the old age of the car. Thus, make sure you know your compulsory deductible before buying a vehicle insurance policy.
When it comes to the voluntary deductible, as the name suggests, it is optional for the insured to opt for it. This amount is something that you need to zero in on with careful consideration and thought. Continuing on what was mentioned earlier, this amount will be paid by you in addition to the compulsory deductible. While the compulsory deductible does not affect car premium, voluntary deductible has a direct impact on the same. To be precise, it is inversely proportional to the premium amount. Essentially, deciding this amount is a balancing act, taking into consideration your budget, risk exposure, and other associated factors. For example, if you are confident that you are a safe driver and there are very limited risks your car is exposed to, then go for a lower deductible that will help you save on the car insurance premium in the long run.
This was a brief about deductibles of a online car insurance policy​. This feature is incorporated in vehicle insurance policies in order to ensure that a restraint is exercised by the insured in claim requests. It also curbs the practice of excessive and frequent claims up to a large extent. Additionally, the deductible factor enforces a sense of discipline for the car owners to be careful about their car’s safety.