An Insurance deductible is to support you when there occurs a loss which is huge and beyond the capacity of your pocket. There is a limit to expenses which we can bear in our daily lives. Same goes with the insurance of the assets.
You have a car worth Rs.10 lakhs and you buy insurance for it. The insurance premium is Rs.55000/- and the deductible as mentioned is Rs.15,000/-. Now, to this, you agree that you can bear any claim till Rs.15,000. But beyond this, you need the support of insurer to take care of expenses above this amount.
Here Rs.15,000 is the deductible which you as the policyholder can afford. It also means that up till this amount, you can have self-insurance of the risk.
Presume that your car gets a bang on in the extremes of the traffic. There is no way you could manage a saviour and there rips off the bumper of the car along with the rear camera. The total loss including the bumper and the camera costs to Rs.40,000/-. As per the condition of the insurance contract, the first Rs.15,000 will be managed by you. But the remaining Rs.25,000 will be paid by the insurer.
What happens when the claim amount is less than the Deductible?
If the claim amount is less than the deductible mentioned in the policy, then the claim will not be admissible. This implies that the role of the insurer will not come into the picture when the claim amount is less than the deductible.
Another angle to the substance is that you should be aware of your policy and deductible which indicates the money you will have to bear at the time of claim.
It is good to understand factors like age, susceptibility to damage, history, and the present condition of the asset that you're getting insurance for.
Presume your vehicle which you bought 10 years ago, is no longer in good condition. The car is old and not that fuel efficient now. In these years, despite no fault of yours, you had asked for the claim. In such a situation, even after 10 years, the possibility of claim may be high or low. You must think of the deductible when you get the insurance when the value of the vehicle reduces.
With time, the insured value of the vehicle also depreciates but the repairs of parts like bumper will attract price as per the latest installations. This will force you to spend the same amount for repair even when the value and premium have reduced over time.