What You Have to Pay as a Policyholder During Car Insurance Claim?

At the time of a claim settlement, the policyholder will have to pay a certain part of the insured amount. The amount can be fixed by the insurer or the insured at the time of policy purchase or policy renewal depending on the factor you are bearing. A policyholder will have to cover the following:

• Compulsory deductible - A compulsory deductible is a fixed part of the insured amount that the policyholder has to bear at the time of claim settlement. The compulsory deductible to be paid depends on the vehicle’s engine capacity as shown in the table below:

Engine capacity	Compulsory deductible amount
Vehicles with up to 1,500 cc engine	Rs.1,000
Vehicles with over 1,500 cc engine	Rs.2,000

In case the vehicle is really old, the insurer can charge a higher compulsory deductible.

• Voluntary deductible - A voluntary deductible is a part of the insured amount that the policyholder volunteers to pay at the time of claim settlement. The amount for the deductible is fixed by the insured at the time of policy purchase or policy renewal.

Unlike the compulsory deductible, voluntary deductible has an impact on the car insurance premium to be paid. The higher the amount of voluntary deductible one chooses to pay, the lower will be his/her car insurance premium.

• Depreciation - Depreciation is the loss in the value of one’s car and its parts/accessories with respect to its age. At the time of claim settlement, the insurer will pay the claim amount minus the depreciated value of the car parts that have to be replaced or repaired. In such case the insured will have to bear the expenses for the replacement/repair of the car parts.

The depreciation rates for the car parts/accessories are fixed by the government and is followed by all insures across the country. The depreciation rates are as follows:

• 50% on car parts that are prone to high wear and tear, such as batteries, rubber/plastic parts, tyres/tubes, etc.
• 30% on car parts made of fiberglass .
• 0%-50% on metallic car parts (depending on the age of the vehicle).
• 50% on the car’s paint job.

The table given below exhibits rates of depreciation on all the other car parts, which includes the wooden parts as well:

Age of Vehicle	Rate of Depreciation
Below 6 months	0%
Above 6 months but less than a year	5%
1 year - 2 years	10%
2 years -3 years	15%
3 years - 4 years	25%
4 years -5 years	35%
5 years -10 years	40%
More than 10 years	50%

• Towing charges - The towing facility offered under the car insurance policy is limited to the specified geographical location and there is a limit to how many times the facility can be used as mentioned in the car insurance policy. If the towing facility is availed outside of the specified limits, the insured will have to bear the expenses for the same.

• Consumables - Consumables for a vehicle are small vehicle parts that cannot be reused again. Consumables include screws, grease, nuts and bolts, engine oil, etc. The insured will have to bear the expenses for the replacement or repair of the consumables.

• Existing damages - In case the car has any existing damages as a result of previous mishaps that haven’t been claimed at the time, in the occurrence of any future mishap, the already existing damages will not be covered by the insurer. In such cases, the policyholder will have to pay for theses existing damages.

Some of the above can be mitigated by opting for appropriate add-on covers such as Zero Depreciation cover, Roadside assistance cover, Return-to-invoice cover, etc.