What is deductible in motor insurance and why is it important?

A good insurance policy is a must for your peace of mind. Insurance policy gives you the confidence to drive your car risk-free. The government of India has made it compulsory for all the vehicle owners to have a third-party cover. There are numbers of different insurance policies such as third party Insurance cover, comprehensive cover, etc. There are also a lot of different add-ons such as engine protection cover, key replacement cover, roadside assistance cover, nil depreciation cover, etc. Thus, you have a variety of option in front of you- to choose the best one for your car. The insurance companies have also started providing car insurance online; thus, you can simply compare and choose the policy best-suited for you.

But, even if we find the policy of our choice, there are these insurance premiums that we have to pay. This is where the problem arises because we all want the best insurance policy but at the lowest premium possible. Increasing your insurance deductible is one of the ways to cut the premium amount that you pay to the insurance company. However, there are many among us, who still don’t know the concept of deductibles completely. For them, this article will highlight the concept of deductibles and its importance.

What is deductible?

A car insurance deductible is a payment you need to make before your insurance covers the rest of the amount. For e.g. Ramesh is involved in an accident and has caused 10,000 rupees worth of damage. He has set his deductible at 3,000 rupees. Therefore, he will have to shell out around 3,000 rupees before his insurance policy covers rest of the money.

Why deductible is important for you?

The car insurance deductible that you pay decides the overall premium that you will be paying to the insurance company. Thus, you can decrease the amount of your insurance premium by increasing the overall deductible amount that you pay. However, before deciding on your deductible amount, make sure to keep these factors in mind:

• Your funds: Make sure that you check your emergency saving before deciding on your deductible amount. Because, if you are not the type to save- then you will face a lot of problems in case of an accident. This is because you will have to pay a higher deductible amount. Thus, if you are bad at saving then you should choose a lower insurance deductible amount.
• Your vehicle evaluation: Also, check the total evaluation of your vehicle before finalizing on your deductible amount. Because the insurance premium that you pay depends on the total evaluation of your vehicle. Thus, if you have an expensive vehicle, it is wise to choose a higher deductible value. By making this simple decision, you will save a lot of money. But then again, this is subjective to your needs – if you feel that you can cover the insurance premium, it makes sense to opt for a lower deductible as the cost of spares with an expensive car is bound to burn a hole in your pocket.

Thus, the deductible you pay shouldn’t be very high but at the same time, also not too low. Hope, this article helped you get a clear idea about the car insurance deductible and its importance.

John dias is a finance student who loves to write during her spare time. He has considerable information about the car insurance. Through her work, He has provided valuable information about smart borrowing when it comes to this insurance.