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How To Leverage Voluntary Excess While Buying/Renewing Car Insurance?

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How To Leverage Voluntary Excess While Buying/Renewing Car Insurance?


Insurance companies commonly use jargon. Understanding the jargon used in insurance lingo is critical to simplify the purchase, be it health insurance or even car insurance. Here in this article, you can learn more about the term ‘excess’ and how you can leverage it to influence car insurance prices.

Renewing Car Insurance

What is excess in car insurance?

Excess, also known as a deductible, is one of the considerations when settling insurance claims. It is that component that you, the policyholder, have to pay at the claim’s time of settlement. It is a pre-defined out-of-pocket expenditure required to be borne before the settlement of your claim application. Its main purpose is to discourage policyholders from making claims for small amounts.

What are the types of excess/deductibles in car insurance?

Whether you buy car insurance online or offline, there are two types- standard / compulsory and voluntary excess. As the name suggests, the mandatory excess is compulsory, whereas the voluntary excess can be opted by you. Here, you can choose the amount which you wish to pay over and above the compulsory deductible.

Standard / Compulsory Deductible: The compulsory deductible is predefined by the regulator, the Insurance Regulatory and Development Authority of India (IRDAI), and is mandatory for all motor insurance policies. The table below explains the amount of compulsory deductible that is charged for car insurance plans-

Engine CapacityCompulsory Deductible (₹)
Not more than 1500 CC1,000
More than 1500 CC2,000

Voluntary Deductible: Unlike standard deductibles, a voluntary deductible can be opted for. It is something you need to set only after careful consideration and thought. As mentioned above, a voluntary deductible is an out-of-pocket expense and is required to be paid over and above the compulsory/standard deductible.

How does voluntary excess work?

While the compulsory deductible has no impact on your premium, a voluntary deductible has a direct impact. It is inversely proportional to the premium of your car insurance policy. The more you opt for the voluntary excess, the lower is your premium. You assume more and more responsibility to pay at the time of claim by selecting a voluntary deductible. Thus, it must be selected with great caution and after carefully considering your ability to pay for the damages at the time of claim.

Is it advisable to increase the voluntary deductible?

Whether to increase the voluntary excess depends on your future payment capacity. If you want comprehensive coverage from their insurance cover, it is not advisable to opt for a higher voluntary deductible. On the contrary, if you have adequate savings that can be used for repairs to your car, then lowering your premium using the voluntary deductible can be suitable for you.

These are some tips about voluntary deductibles that can help you in car insurance renewal and purchase. Make sure to adjust the deductibles to what suits you the best and avail comprehensive coverage at an affordable cost.

Eula Boone

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