Understanding Voluntary Deductibles in Bike Insurance

Purchasing a bike insurance cover requires considering not just one, but many factors together. The age of your bike, the engine capacity, the accessories fitted, are some factors that have an impact on premiums. But apart from these, deductibles are another component that impact the premium too. There are two types of deductibles – standard or compulsory and voluntary deductible. To know about voluntary deductibles for your bike insurance policy, you need to first understand what are deductibles.

What are deductibles in a bike insurance policy?

A deductible is that component which you, the policyholder is required to pay when a claim is made. Although, your insurance policy covers most expenses, deductibles are an out-of-pocket expense when a claim is raised. The regulator, Insurance Regulatory and Development Authority of India (IRDAI), has made it a mandatory requirement for every bike insurance policy.

As described above, deductibles are further classified in two types – compulsory and voluntary. A compulsory deductible is the one that is applicable for all policies whereas a voluntary deductible can be opted over and above the compulsory or standard deductible.  Voluntary deductible is the cost of repairs you take up for any future repairs while the balance is paid by the insurance company.

Does voluntary deductible impact your premium?

Being an out-of-pocket expense, it does have an impact on your bike insurance premium. Opting for a voluntary deductible will help you save money in the beginning. This benefit will accrue by reducing your premium costs at purchase as well as insurance renewal too. The reason for lowering your premium is that you agree to take up this specified portion of liability whenever a claim is made. In a way, it reduces the insurance company’s risk of financial liability and thus, the insurer passes on the benefit to you by dropping the premium payment. However, you need to balance not going overboard otherwise it will lead to a hefty payment at the time of claim.

Is it advisable to opt for voluntary deductibles?

Voluntary deductibles are optional, and you need to compulsorily subscribe to it. That being said, in some cases it makes sense to opt for it, especially when you know you are a safe rider and you have enough cash reserves. In such a situation, lowering your premium today can benefit you. Since these benefits come with a future commitment to pay at the time of claim, not everyone should be selecting. Today’s benefits are negated by an uncertain liability to shoulder at the time of claim. So, if you are someone who wants a comprehensive cover from your two-wheeler insurance policy, it is not advisable to opt for a voluntary excess. On the other hand, if you have enough savings to pay for repair costs, then take advantage of reduced premiums today.

To conclude, these are some ways how you can leverage voluntary deductible to suit your situation. Whether you are buying a bike insurance first time, or due for two wheeler insurance renewal, take a note of both the advantages and disadvantage of choosing voluntary deductible and then make the right choice.

 

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