Get Clarity about Car Insurance ‘Excess’ Before Zeroing Down On Your Plan

Being a car owner, you are aware of the importance of purchasing car insurance. An insurance policy with adequate coverage safeguards your vehicle against possible damage or loss. Choosing the right plan is easier than you think. All you need to do is research plans thoroughly based on various factors that determine the premium you need to pay.

Here, we will talk about one of these factors, which is car insurance ‘excess’ in detail.

What is Car Insurance ‘Excess’?

It is the amount you choose to pay at the time of claim settlement, while the insurer pays the remaining expense of car damage repair. In India, car insurance ‘excess’ is commonly known as deductible and is a percentage of the total claim amount.

For instance, if you filed a claim of Rs. 10,000 and chose an excess of 10%, you will have to pay Rs. 1,000 for the repair costs and the insurance company will pay the remaining bill of Rs. 9,000.
The excess or deductible payable may vary from one car insurance policy to another. Also, you can adjust it to a higher value depending on your needs or preferences.

Why Do Insurance Companies Ask for Deductibles?

You buy car insurance to avoid substantial financial loss in case you meet with an accident. It is common to have minor bumps, scratches and dents on your car depending on your driving experiences. Since you want to save your hard-earned money on repairs, you would not think twice before filing a claim for even the smallest damages to your car.

While this may sound appealing to you, the frequency of claims will increase at the insurer’s end, and the premium will skyrocket. Subsequently, paying a higher premium would burn a bigger hole in your pocket.

By making you pay the deductible, the insurance companies keep the premium affordable and expect you to only claim for significant repairs.

How Much Deductible Should You Choose?

This is one aspect related to buying car insurance, where many people get stuck. They often end up choosing the standard deductible given by the insurer.

The amount you choose as a deductible has a direct impact on your car insurance premium. The higher the deductible, the lower will be your premium and vice versa.

A higher deductible does mean you will pay more money out of your pocket during claim settlement. But if you are an experienced driver, this makes sense for you as you will pay a lesser premium. Since the decision is all yours, it is crucial that you look at it from different angles before making the final decision.

Paying Very High Deductible? Switch to a Better Option

As a car owner, you know well where to put your hard-earned money better than anyone else. While lowering the deductible will make you pay less during claim settlement, you pay more while buying the car insurance policy. Similarly, increasing the deductible makes the policy more budget-friendly, while you need to pay more at the time of claim settlement.

You can even switch to a different insurer in case you are unhappy with the services of the existing one. However, make sure that you review the car insurance buying or renewing process while selecting an insurance company. Car insurance policies offered by reputable insurers such as TATA AIG are easy to buy or renew online.

Irrespective of the chosen deductible, it’s more important that you are comfortable paying timely premiums and paying for the excess does not cause financial worries to you.