Compulsory Deductible Vs Voluntary Deductible

The terms “compulsory deductible” and “voluntary deductible” are usually brought up when car insurance is discussed. But how are they different from each other? To understand that you must first know what exactly is “deductible”.

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What’s a Deductible?

Having a car insurance is mandatory as per the Indian law. When you get an insurance cover then your provider takes the responsibility of the repair expenses in an event of accident or car damage through any other way. And although the exact premium and coverage provided may vary from one insurance company to another, you invariably have to pay a certain fee which’s called a “deductible”.

Compulsory Deducible

The compulsory deductible is a small amount (anywhere from Rs. 50 to Rs. 500 as per IRDAI regulations) you have to pay from your own pocket for handling repair expenses before the insurance provider pays the remaining amount.

The compulsory deductible is usually fixed and is usually applicable to almost every kind of car insurance policy.  Thus, you can’t claim insurance cover unless you have paid the compulsory deductible.

Voluntary Deducible

If you want to pay smaller premiums then you can opt for a voluntary deductible policy. In this, you choose your own limit for the deductible, i.e. the portion of the expenses you are willing to pay from your own pocket. For instance, you can get a discount of as much as 20% by choosing a voluntary deductible of Rs. 2,500 with ICICI Lombard.

Choosing voluntary deductible is a trade-off, in which you get to enjoy attractive premiums but have to a bear high cost when you claim insurance. Thus, you must choose between voluntary and compulsory deductible wisely after considering affordability and risk both.