How much Does a Motor Insurance Policy Holder Pay when Making a Claim?

When it comes to car or motor insurance, there is something called Exclusion. Exclusion is an instance or a provision in the insurance policy which removes the company’s liability to pay during certain instances. Thus, in such circumstances, the coverage is removed. Most car insurance covers many incidents, but there are always exceptions or exclusions. There are some risks which these companies just won’t take.

The first question is, why do car insurance companies have exclusions?

Car insurance exclusions have many purposes, most o which fall under categories like:

1. Catastrophic exclusions: These are risks that affect many people at the same time. Such events pose a big risk to any car insurance company, such as nuclear war.

2. Alternate coverage: These are risks that are not covered by any specific car insurance plan as they are offered under another type of insurance scheme.

3. Easily controllable risks: Events like damage to your car that could have been averted if you were more careful fall under this category. For instance, damage due to driving fast on a rainy day.

4. Intentional or non-accidental damages: The company won’t pay you a penny if you damaged the car yourself to get the claim money.

5. Illegal activities: If you insured the car and used it for illegal activities, don’t expect a penny from the insurance company.

6. Wear and tear: Damages due to normal wear and tear won’t be entertained by insurance companies. These are not covered.

Coverage can change from time to time, and so always keep in touch with your insurance company for updates.

Share of the policyholder

You may think that you’ll get the entire amount of the claim, but it does not work that way. You need to bear a part of the claim amount, regardless of the plan’s coverage.

Here are the charges a policyholder needs to pay.

1. Compulsory deductible: This is the fixed section of the claim amount that you need to bear if you want the claim money. The compulsory deductible sum is lower compared to variable deductibles. Compulsory deductible depends on your car’s engine capacity. The amount ranges from Rs. 1000 to Rs. 2000. Charges are higher for old cars. This deductible has no change on the premium.

2. Voluntary deductible: This is the deductible which you choose to give. When making the claim, you pay this amount. One benefit of choosing to opt for this is you get lower premiums.

3. Depreciation: Value of all cars falls with age, and this drop is called Depreciation. It is applicable on car parts as well. During making a claim, the insurer shall consider the depreciation of the car parts and exclude their value from the claim amount. It is the car owner who needs to bear the burden of depreciation.

 As you can see, these are the charges you as the policy holder needs to pay when making a claim.