Voluntary Discounts In Car Insurance

Voluntary deductibles are useful in getting lowered insurance premiums and they are a useful tool in guarantying savings.

Deductible can be defined as the amount that an insurance company/ online car insurance company will deduct before the pay out of the claim is made. A deductible is called mandatory when it is factored in the product and it is not possible to opt out of it. Sometimes the deductible is also in the form of time and not money.

Understanding Deductibles

The kind of monetary loss that is born by the online car insurance buyer is called the deductible and it has two parts: voluntary and compulsory deductible. A compulsory deductible of Rs 1000 would ensure that the policy buyer pays Rs 1000 out of the claim amount while the balance amount is paid by the insurance company. It is possible to reduce the premium value if an additional voluntary deductible is paid.

In case one opts for a voluntary deductible of Rs 3000 then you would get a sizeable discount on the premium value. In case of an accident or other mishap, a deductible of INR 3500 of the claim amount has to be paid (this includes 3000 voluntary and 500 compulsory discount). People who are confident about their driving skills often opt for voluntary deductibles in online car insurance to ensure savings on the premium value.

In case of health insurance, another example would be when Asha buys a policy that has a maximum limit of 4 lakhs for hospital expenses with deductible of Rs 20,000. When Asha was hospitalised the bill reached 1 lakh. In this case the insurance company paid Asha 80,000 INR (one lakh minus 20,000). The balance amount has to be borne by Asha.

Advantage of Deductibles

There are a lot of reasons as to why an online car insurance company will charge a deductible. Firstly, when a deductible is charged, a lot of bad claims are held off. The claimant is supposed to bear the expense of the deductible first and only then is the rest of the bill value cleared by the insurance company. Since the insurance seller only pays for claims when total bill value exceeds deductible amount and that is a value lower than the extent of deductible. This translates to savings for the online car insurance company on the basis of low valued claims and these benefits are passed on to the customer in terms of lower premium range. It is not possible to examine the impact of premium reduction as its already factored in.

Health insurance experts say that if one is healthy and not unnecessarily worried about coverage of small claims then it’s not advisable to worry about a health insurance deductible. One can then use the benefit offered by a low value premium. Voluntary deductibles are offered at the discretion of the buyer and it is over and above the value of a compulsory deductible. A voluntary deductible is basically a commitment of further contribution from insurance purchaser end should there be a claim.

This article is written by Moupee Deb Roy, content writer for Turtlemint.com. She is a content enthusiast and is determined to encourage people to be informed and compare and buy online car insurance.

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