What are Car Insurance Deductibles?

If you have purchased a car then you should be aware of car insurance deductibles. If you are new to the insurance terms then your friends, colleagues, business partners, family members should have told you regarding the car insurance deductibles and also should have advised you to have high insurance deductibles. It is clear that insurance deductibles are very important which are required for car owners to buy. Here in this article, we provide you with complete information and understanding about the insurance deductibles.

Car Insurance Deductibles

In the insurance world, the term deductible is the most frequently used term in insurance plans. Every general insurance plan will have deductibles included in the plan. In the case of car insurance, the deductibles are decided and agreed upon. It means that the insurance policyholder is agreeing and willing to pay the deductibles. This is an amount that is decided and will be paid for the car repairs before the actual insurance will begin its coverage. 

When you are applying for car insurance, the deductibles portion will come into effect. The expenses to be covered by your insurance company for your car damage will start after you pay completely for the insurance deductible amount.

Ways of car insurance deductibles

The most frequently discussed car insurance deductibles are categorized into ways they are fixed and voluntary deductibles. Some insurance companies provide the facility of having both fixed and voluntary deductibles. Here is a brief explanation of both the deductibles.

• Fixed Deductible

This deductible is also known as the compulsory deductible. This amount is a mandatory payment towards car insurance deductibles in UAE, Dubai. It is ascertained following the car condition and life of the engine. The fixed deductibles are mandatory and cannot be altered by the policyholder. A compulsory deductible is a way to incentivize good driving behaviour. 

• Voluntary Deductible

Voluntary deductible provides a facility to the policyholder that they can choose the car insurance deductibles. The voluntary deductibles are like an add-on service that will increase the cost of the insurance company. If you choose less add on services then the amount on insurance will be less. Voluntary deductibles should be provided by the insurance company but as the policyholder has agreed to voluntarily pay for the company they are agreed upon. Discounts are provided by the insurance company for the voluntary deductibles. For different types of coverages, you can choose the percentage of deductible. In this method, the insurance policyholder will get a chance to select insurance deductibles in a smart way. 

Working mechanism of Deductibles

Car insurance deductibles are simple and straightforward. If you make a car insurance claim for an already active insurance plan, the insurance company will pay for the expenses only if you have paid for the insurance deductibles. Each time you go to claim insurance deductibles become applicable on car insurance. 

Suppose you got car insurance that has five hundred Dirhams as compulsory insurance deductibles and you have chosen two percent as voluntary deductible. Now if you opt for an insurance claim of ten thousand Dirhams the insurance company will provide coverage which will remain after paying compulsory insurance deductible and two percent of cost.                                                                                                                                                                                                                                                                                                                                                                                                   

Insurance deductibles should be fully paid prior to coverage of insurance and if the claim amount remains lesser than deductibles on car insurance then you will pay total repair expenses on your own. It is always advised to make calculations of your car repairs expenses & find deductible costs prior to claiming insurance. 

Impact of Insurance Deductibles

Insurance deductibles will have an impact on car insurance either direct or indirect. As you may be aware that voluntary deductibles will make insurance plans cheap or costly. The more number of voluntary deductibles you are willing to pay, the lesser the insurance premium. 

On the other hand, mandatory deductibles will not have a direct impact on car insurance premiums. It will aim at making insurance easier, more convenient and everyone can afford it. 

The condition of the car will decide the mandatory car insurance, the car engine condition, car to get insured and other aspects that make the insurance premium. The more care you take for your car, the lesser will be compulsory deductibles. In the UAE, good drivers are always rewarded if you follow good driving practices then you will get discounts, add on services from the insurance provider. 

Why is it required to add Deductibles?

Adding car insurance deductibles will make the insurance policyholder responsible for safe driving. If the car driver thinks that the insurance company will provide insurance and gets into careless driving then it is not good for the policy provider or policyholder and it compromises the safety of others on the road. To avoid rash and to make the driver responsible for driving and the losses deductibles are made part of the car insurance. By having car insurance deductibles on insurance plans the car owner is made responsible for his car and also the safety of others on the road. 

Which insurance deductibles are best?

Insurance deductibles which one is best either high deductibles or low insurance deductibles. It requires technical analysis and is based on car driving requirements. Below are some points that you have to consider for a car insurance plan.

Affordable insurance plan

Choose the insurance plan which you can afford, if you take a costly insurance plan it can become a problem to handle. Insurance deductibles are calculated in percentages and you will not know till the end how much you are paying. It is best advised to find the details prior to getting insurance finalized. If you are choosing the right insurance deductibles also make a point to note that you are affording to pay for the deductibles. 

Driving History

Good driving practices and a clean driving record will decide whether you will get less or more deductibles percent. If you have good driving habits you will not get into a car accident. Accidents are uncertain but good driving habits can prevent accidents and avoid unnecessary expenditures. In case of an accident, calculate if you can handle costly insurance deductibles.

Getting cheap car insurance is a prime requirement?

Find out what are your requirements for car insurance and what do you expect to cover under the plan. Based on this question you will get to know if you are going for cheap car insurance or costly car insurance. If you are avoiding deductibles then in case of an accident you should be ready to bear all your losses incurred to the car. You should make this decision considering the future aspects. 

Takeaway

If you properly understand the car insurance deductibles then you will know that they are for your benefit. You will not have to spend money out of your pockets during emergencies. The amount that you pay for car insurance deductible should be affordable within your capacity. Make the right calculations of your expenses and also make sure you are not overburdened with high insurance deductibles.