Are You Aware With Jargons Related to Your Insurance Policy?

Mr. Sharma was interested in buying a two wheeler Insurance for his prized passion, he bought recently. He is a smart buyer so decided to buy a plan online. But while visiting the website of the insurance provider, he got confused by the insurance jargon and different clauses.
Seeking for help, he approached his neighbour. Being employed with an insurance company himself, the neighbour offered a lowdown on various types of auto insurance and deductibles associated with each. Here is what they discussed.

Two-wheeler Insurance Types:

There are types of two-wheeler insurance policies:

Third-party Liability Cover: It is a mandatory cover by State Law to be taken for any two-wheeler running on the roads. It protects you against any legal liabilities arises out of the damages to the third-party in an accident, when the insured is at fault. The premium is very minimal.

Comprehensive Cover: As the name suggests, this cover means all round protection. By including own damage cover, this plan provides protection at the time of any damages occurred due to man-made disasters like theft, fire, vandalism, strike, riot, terror attack etc. It is an optional plan which doesn’t cover third-party liability and premium is slightly higher than the other one.

What is Deductibles?

Deductibles are the part of your claim that you have decided to pay yourself and claim the rest of the amount. In other words, it is the threshold after which your insurer pays up to a maximum limit of your insurance cover.

Variants of Deductibles

Deductibles are mainly of two types- Compulsory Deductible and Voluntary Deductible.

Compulsory Deductible is decided by the insurer and you as an insured will have to pay compulsorily. The amount of deductibles varies insurer to insurer, as per IRDA it starts from Rs. 50 for two-wheeler to Rs. 500 in case of four-wheelers. There is no way out for lowering the premium for compulsory deductible and the insurer may pose higher deductible if your vehicle is older or at high risk of claim.

For instance:  Amit takes a two-wheeler policy which offers a maximum limit of Rs. 2 lakhs for hospitalization with a deductible of Rs. 15,000. When Amit required filing a claim due to reimburse the hospitalisation expenses, which came to 80,000. The insurer will pay Amit Rs. 80000 minus deductible amount of Rs. 15,000= 65,000. The remaining 15000, Amit will have to pay by himself as compulsory deductible.

Voluntary Deductible, on the contrary, is an optional deductible for the buyer. It is applicable when your policy renewal date arrives and you pay a certain amount of your claim voluntarily. You can earn a discount on premium by paying the voluntary deductible. Below is a rough estimate of how you can earn on Voluntary Deductible.

Deductible Amount	Discount on Premium (%)
Rs 2500	20
Rs. 5000	25
Rs. 7500	30
Rs. 1200	35

That means, higher the voluntary deductible you decide to pay, lower the insurance premium you will pay!

If Amit feels that he is a good driver and has no claim history, he can opt for this deductibles. Simply opting for the highest deductibles of Rs 1200 and get a bulky 35% off on his bike insurance premium. According to this, if Amit files a claim, he will pay for the amount up to 1200 and the rest claim will be paid by his insurer.

Compulsory Vs Voluntary Deductibles

Compulsory Deductibles	Voluntary Deductibles
The amount is fixed by the insurer and the insured is bound to pay this.	The amount is decided by the policy holder and it is optional
It has no effect on your insurance premium rate.	It impacts on your premium as higher you decide to pay as deductibles, lower the premium you will pay.
At the time of claim, only compulsory deductible is required to be paid.	It requires the insured to pay both the compulsory and voluntary deductibles when a claim is made and thereby the total amount is high.

We hope after this discussion Mr. Sharma takes a wise decision about his two-wheeler insurance and will consider all the important terms and clause of insurance policies while buying one!

There are some bike insurance provider where you can visit like Bajaj Allianz, Iffco Tokio and Bharti Axa Two Wheeler Insurance.