Car owners now are more aware about automobile insurance policies. This awareness can help you bring down the cost of car insurance premium or even help you get the best deal. Awareness among policyholders has been on the rise continuously and policyholders are now comparing annual insurance premium quotes from two or more insurers.

Voluntary deductibles: One way of reducing annual car insurance premium is to opt for voluntary deductibles. Voluntary deductibles play an important role at the time of filing a claim. Generally, when the policyholder files a claim, depending on the vehicle, a policyholder needs to pay a certain portion of the claim from his own pocket, which is called a mandatory deductible. In case of big vehicles, where the engine capacity is more than 1,500 cubic centimetres, a policyholder has to mandatory pay Rs 1,000 out of the total claim. Similarly, in case of smaller vehicles, which have 1,500 cubic centimetres or less powerful engines, the policyholder has to pay Rs 500 out of the total claim.

Voluntary deductible is an extension of the same concept, which gives you a discount on your own-damage premium, but, in case you file a claim, you will have to pay a certain amount out of your own pocket that you have agreed on at the time of buying the car insurance policy.

Insurance companies generally provide four levels of discounts. The minimum amount of voluntary deductible is Rs 2,500, where in case of a claim, the policyholder must first pay Rs 2,500 out of the claimed amount from his own funds and the insurer pays the rest of the amount. Policyholders can get a maximum discount of Rs 750 in case he opts for this deductible. The maximum amount of voluntary deductible is Rs 15,000 and the car owner may save up to Rs 2,500 if he chooses this option. Other options that are available to a policyholder are Rs 5,000 and Rs 7,500 in voluntary deductibles.

Low participation: These discounts are availed by very few people because awareness is still very low about these options. As per industry estimates, only 2-3 per cent of policyholders actually opt for these discounts. “Motor insurance was detariffed in 2008 by the regulator, the Insurance Regulatory and Development Authority (Irda), and voluntary deductibles have been available from various insurers since then. However, the concept is yet to catch up with policyholders,” said Sanjay Datta, head of underwriting and claims at ICICI Lombard General Insurance.

However, before buying this type of coverage, you must be confident that you will drive carefully and will not file claims for small damages. Any claim will require you to pay a fixed portion of the total claim amount. “This is a very useful feature that can benefit a lot of vehicle owners. Policyholders, who have chauffeur-driven cars or drive in a very disciplined way, may go for this discount,” said Vijay Kumar, head of motor insurance at Bajaj Allianz General Insurance.

The policyholder must also make sure that his policy mentions the voluntary deductible chosen by him correctly. Any negligence pertaining to insurance renewal or details missed about the car may cost you dearly at the time of filing a claim.