The policyholder must agree to pay the voluntary deductible before filing an insurance claim. Based on their ability to pay, the policyholder decides this particular amount. If the voluntary deductible is high, the premium amount for the policy gets reduced on its own.
The mandatory deductible is a fee added to claims rather than covered by the insurance premium. A voluntary deductible is a money you can decide not to apply to claims for a loss or damage the insurance policy will pay for.
How can Voluntary Deductibles Reduce the Premium?
You lessen your insurer's exposure by agreeing to pay a portion of the claim amount when you choose the optional deductible under your auto insurance policy. Your insurance company decides to lower your rate by some amount due to a reduced payout on claims. The voluntary deductible amount you select is inversely related to the required premium payment. The higher the optional deductible, the lower the cost of auto insurance, is what it means.
When to Pay the Voluntary Deductible?
If you claim your car insurance policy, you must pay the voluntary deductible amount. Furthermore, you are only required to pay the deductible once your insurance company has approved your claim. Your insurance company will ask you to pay the deductible at the workshop when your claim is authorised. The insurer will pay the remaining balance of the charge.
You will be mistaken if you believe you can eliminate the mandatory deductible on your auto insurance coverage by choosing a voluntary deductible. You must pay the entire mandatory deductible and the voluntary deductible when you file a car insurance claim.
Advantages of the Voluntary Deductible in Car Insurance
Making a wise choice about the optional deductibles is required when purchasing vehicle insurance coverage. Higher optional deductibles might be chosen to have a reduced rate if you are a careful driver with good disposable income. But if you drive recklessly, it's best to minimise or avoid optional deductibles completely.
One of the major advantages of a voluntary deductible is that it considerably reduces the premium you must pay every month. If you deem it fit for you and are interested, you should go ahead.
What is the Other Type of Deductible in Car Insurance?
Before receiving any compensation from the insurer, a policyholder must pay the compulsory deductible towards losses resulting from damage to the vehicle in an accident. The mandatory deductible is a fee added to claims rather than covered by the insurance premium. A compulsory deductible is one where the insured is forced to pay a portion of the claim out of pocket. According to IRDA regulations, the mandatory deductible is INR 1,000 if the car's cubic capacity is less than 1,500 and INR 2,000 if it is more than 1,500.
A deductible is just the amount you must pay to your insurance provider before you proceed with a claim or reimbursement, which you must cover out of pocket before your insurance provider covers the remainder. Choosing the appropriate deductible is a difficult undertaking. The simplest way to choose the voluntary deductible amount is to consider your driving history and your budget for car insurance. These two factors would be used as a deciding factor for choosing the deductible.