When it comes to owning and riding a two-wheeler, having insurance is not just a smart choice—it’s mandatory by law in India.
However, the cost of insurance premiums can be a burden for many riders. To help manage these costs, insurers offer various strategies and policy options. One effective way to reduce your two wheeler insurance premium calculator is by opting for a voluntary excess.
In this post, we will explore what voluntary excess means in bike insurance, how it impacts your insurance premium, and why you might consider it when you buy two-wheeler insurance.
What is a Deductible in Two-Wheeler Insurance?
A deductible is the amount of money the policyholder must pay out of pocket for repairs before the insurance company covers the remaining costs. Deductibles are divided into two main categories:
- Compulsory Deductible: This is a fixed amount set by the Insurance Regulatory and Development Authority (IRDA) that every policyholder must pay. For two-wheelers in India, this amount is Rs. 100. It is mandatory and cannot be altered by the policyholder.
- Voluntary Deductible: This is an additional amount that the policyholder can choose to pay in case of a claim. The policyholder decides the amount based on their affordability and willingness to take on more financial responsibility in exchange for a lower insurance premium.
How Does Voluntary Excess Work?
When you choose a voluntary excess, you agree to pay a higher portion of the repair costs of a claim. In return, the insurance company offers a discount on your premium. It means if you have an accident or need to file a claim, you will pay both the compulsory deductible and the voluntary excess before the insurance company steps in to cover the rest.
For example, let’s say you choose a voluntary excess of Rs. 5000. If your two-wheeler gets damaged and the repair costs are Rs. 10,000, you would pay the compulsory deductible of Rs. 100 and the voluntary excess of Rs. 5000. The insurance company would then cover the remaining Rs. 4900.
The Benefits of Opting for a Voluntary Excess
Opting for a voluntary excess can lower your insurance premiums, offering a cost-effective way to manage your insurance expenses.
- Lower Premium Costs
The primary advantage of choosing a voluntary excess is the reduction in your insurance premium. The higher the voluntary excess you agree to, the lower your premium will be. It is because you are taking on more risk, which lowers the financial liability for the insurance company.
- Customisable to Your Budget
Voluntary excess allows you to tailor your insurance policy to fit your budget. You can decide how much additional excess you can afford to pay in the event of a claim, balancing your financial capabilities with your desire to reduce premium costs.
Considerations Before Opting for a Voluntary Excess
While the prospect of lower premiums is attractive, there are important factors to consider before opting for a voluntary excess:
- Financial Readiness
Ensure you can afford to pay the higher excess amount if you need to make a claim. If the voluntary excess is too high and you cannot afford it, you might face financial strain in the event of an accident.
- Risk Assessment
Evaluate your risk of making a claim. If you are a careful rider with a low risk of accidents, a higher voluntary excess might be beneficial. However, if you frequently ride in high-risk areas or have a history of claims, a lower voluntary excess might be a safer choice.
- Claim Frequency
Consider how often you need to make a claim. If you anticipate making frequent claims, the savings on your two-wheeler insurance premium might not outweigh the higher out-of-pocket expenses you’ll incur each time you claim.
Conclusion
When you buy two wheeler insurance, whether online or offline, understanding the role of voluntary excess can help you make an informed decision. Balancing the savings on your premium with your ability to pay the excess can ensure you have adequate coverage without straining your finances. So, consider your options carefully, choose wisely, and ride safely!
