A deductible is the part of an approved claim that you pay yourself. The insurer pays the balance, up to the limits written in your policy. Because you absorb the first slice of every loss, a policy with a higher deductible normally costs less to renew.
Compulsory and voluntary deductibles
- A compulsory deductible is fixed by the policy and cannot be removed. Motor own-damage policies in India commonly include one.
- A voluntary deductible is an amount you choose to take on. Insurers usually reduce the premium in return.
- Some health policies apply a deductible before the sum insured starts paying — this is how most top-up plans work.
A simple example
Suppose a motor claim is assessed at ₹40,000 and your policy carries a ₹5,000 deductible. The insurer settles ₹35,000 and you pay ₹5,000. If your deductible were ₹15,000, you would receive ₹25,000 — but your renewal premium would likely have been lower.
How to choose one
- Pick an amount you could pay immediately without borrowing.
- Compare the premium saving against the extra cost you would carry at claim time.
- Check whether the deductible applies per claim, per year or per hospitalisation.
Deductible rules differ between insurers and products. Read the policy wording and the schedule before you buy or renew.