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Understanding Deductibles in Car Insurance Plans

30 August, 2016

Auto insurance can include third party coverage or comprehensive plans. Third party insurance is mandatory and covers damage to third parties only, therefore coming with low premiums. Comprehensive plans are designed to offer complete protection and provide coverage for damage to your vehicle and person as well, whether caused by theft, natural disasters, riots, or other circumstances.


When purchasing an insurance policy it is important that you understand what deductibles are, and how they affect your premium.


Kinds of Deductibles


1.    Compulsory deductible – This is fixed by the insurance company and must be paid by the holder at the time of claims. According to the regulations, this amount ranges from INR 100 to 150 based on cubic capacity of (2-wheelers) to INR 1000 or 2000 based on cubic capacity of (4-wheelers) . This amount can increase for older vehicles, cars with more cubic capacities, or if higher risks are perceived. The compulsory deductible in a car insurance policy cannot be reduced. Premium is calculated on the basis of the model, make, and insured declared value (IDV).


2.    Voluntary deductible – This is the limit determined by the owner for meeting some part of the claim, before raising a claim to the insurer. Most owners opt for this amount on the basis of their risk assessment and affordability. Opting for higher deductible reduces the premium amount.


While opting for a higher voluntary deductible, owners need to plan carefully. Affordability is not the only criteria for consideration. While lower premiums are beneficial, there are other factors that you need to consider. You need to ensure that potential savings on the premium are more than the expenses you could incur in case of a claim.


Importance of Deductibles


  • Deductibles are provided in comprehensive car insurance to reduce the number of claims. By using compulsory deductibles, insurance companies dissuade owners from making small claims. In addition, higher compulsory deductible encourage drivers to be cautious while driving and to avoid accidents that lead to the filing of claims.
  • Voluntary deductibles benefit owners through discounts on the premium on their car insurance plans. This amount ensures the policyholders avoid filing minor claims. Moreover, when claims are filed, the owners need to bear some portion of the expenses, which makes them more careful.


Buyers of Car Shield from Royal Sundaram can enjoy significant discounts on premiums in case of higher voluntary deductibles. The discount can be as high as 35% in certain cases. Visit the website to learn more about Royal Sundaram’s policies and special offers.

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