What is deductible in bike insurance?


When you are in the process of purchasing a bike insurance policy, you will come across a term known as ‘deductible’. This is an important component of your plan. If and when you need to claim your policy, the deductible of your plan will decide the amount of compensation you receive.

Not sure what deductible is? Well, you’ve come to the right place! The following article will go over some important aspects related to deductible and how you can use it to your advantage when buying a two-wheeler insurance policy.

So what is deductible?

You can think of it as a soft of threshold. In case of a claim, all repair costs that exceed this threshold will be covered by the insurance company. However, all the costs within the threshold need to be paid by the policyholder.

Let’s take an example to better understand how deductible works. Say you have a two-wheeler insurance policy with a deductible of Rs. 500. In case of an accident that results in repair costs of Rs. 2,000 you will have to pay the first Rs. 500 before your insurance provider covers the remaining Rs. 1,500.

Why do we need to pay deductible?

To understand why you pay deductible, you have to first imagine a world without it. Policyholders would be making claims for the smallest of damages and the insurance company would be liable to pay for them all! Deductible safeguard the insurance provider from these unscrupulous claims. It ensures that policyholders only make claims in case of larger, more justifiable repairs.

Types of deductible:

  • i) Compulsory: Well, quite self-explanatory. Every two-wheeler insurance policy will compulsory deductible amount which decides based on the cubic capacity of your bike’s engine.
  • ii) Voluntary deductible: You can also choose to pay added amounts of deductible over and above the compulsory deductible of your plan. This is known as voluntary deductible.

But why pay higher deductibles?

Two-wheeler insurance is supposed to minimize your out-of-pocket in case of repair costs. So why on earth would anyone ever opt for voluntary deductible, right? Well, it’s really simple!

When you opt to pay a higher deductible, you are sharing the cost of repairs with the insurance provider. Therefore, in exchange, your insurance company will reduce the premium of your plan. The higher the deductible you opt for, the lower the premium you pay!

Considering that instances where claims become necessary are quite rare, a higher deductible will bring you year-on-year savings. However, this does not mean that one should opt for an overtly high deductible. This is because, in case of a claim, a higher deductible will result in substantial out-of-pocket expenses, thereby defeating the entire purpose of having insurance in the first place!

So if you are safer rider and are well to do financially, you can opt to pay voluntary deductible. It will ensure nifty annually savings on your two-wheeler insurance policy.

We hope this has been helpful, good luck and ride safe! And remember; always wear your helmet while riding.

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