General insurance is an important part of life. It can help protect you from financial emergencies and provide you with peace of mind by knowing that you can save for other goals in life. This will surely ensure that you can focus on the best things in life and not have to worry about the varying dangers in life.
However, many people are confused by the terms and conditions used by insurance companies when choosing a policy. Before purchasing any general insurance policy, it is important to understand what is included in the plan. Understanding the terms commonly used in insurance terminology can help you make informed decisions. One of these conditions is a deductible. Here is a brief description of what deductibles are and how they affect general insurance:
What are deductibles?
A deductible is a portion of the expenses towards the repair or replacement of any asset covered under a general insurance policy that you must cover before you can claim. Generally, insurance companies pay the claim amount only after the deduction is paid. After the deduction is paid, the insurance company can pay the balance claim amount directly to you or directly to any other party involved.
If the claim is more than the insurance deductible, the insurance company will cover it after you have paid the deductible amount. Conversely, if the claim is less than the deductible, the company will reject the claim. A deductible amount is added as part of a general insurance plan to prevent scams and false claims. This ensures that only genuine claims are made. *
Types of deductibles
Deductibles are an important concept in understanding what is general insurance. There are two types of deductibles in general insurance. They depend on the circumstances around them and their impact on your policy. They are:
- Compulsory deductible
A compulsory insurance exemption is a policy feature determined by the insurance company. It does not affect the policy premium as long as the insurance provider complies with the proper guidelines for setting the deductible. This is because the compulsory deductible is fixed and does not change with any other related factors. Therefore, it is not possible for a compulsory deductible to influence your policy premium. *
- Voluntary deductible
A voluntary deductible is a type of deductible that the policyholder can choose to include or not include. This type of deductible allows the policyholder to determine the exact amount to be paid by the insured at the time of a claim. It is present in all types of general insurance. A deductible is essentially just a part of the claim amount that the policyholder agrees to cover out of their own pocket. You can decide to opt for a voluntary deductible based on your financial situation and insurance needs. The higher the voluntary deduction, the lower the premium. However, it also means that you would have to pay a higher amount at the time of a claim. *
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.