What are Deductible and not Payable Repairs in Motor Insurance Policy

Do you feel cheated by this practice of not paying the entire claim? Well, you shouldn’t. It is true that your motor insurance policy deducts some expenses from your claim amount. But, do you know what expenses are deducted?

There are quite a few heads of expenses and deductibles which are deducted from your claim amount before it is settled. Here is a list of such expenses or amounts which are not paid and also the reason why:

Repairs done on your vehicle which are not linked to the accident: While an accident damages your vehicle and necessitates repairs, there might be other repairs which are not related to the accident your vehicle suffered. Such non-related repairs are not paid by a motor insurance policy. For instance, if you run your car into a tree, the bonnet and other parts of the car would be damaged. When your car is being repaired, the mechanic might find rusted scratches on the rear side of the vehicle and might repair/ touch-up the paint over the scratches. This repair was not a part of the damage incurred due to the accident. As such, expenses incurred for such a repair would not be paid.

Repairs done on any modified part of your vehicle which is not endorsed on your motor insurance policy: There are times when you might make modifications to your vehicle. You may have modified the electricals of the vehicle to install additional gadgets. Similarly, your vehicle might come inbuilt with radial tyres and you change it to tubeless. Any changes which are made to your vehicle should be informed to the insurance company and endorsed on your motor insurance policy. If the changes are not endorsed and, later when there is damage suffered by your vehicle, expenses incurred on repairs of the changed parts would not be paid.

For instance, you might install a bi-fuel kit or a CNG kit in your vehicle. In the case of installation of bi-fuel kit the accident claim would not be admissible; as this is a major change in the policy and requires the consent of the RTA and insurer.

As the vehicle is at the repairers you may decide to have some of the items serviced eg. changing of engine fuel or rectification of some minor loose screws. These costs will not be payable.

Depreciation on your car’s parts: As your car ages depreciation sets in. When you get repairs done, the insurance company factors in this depreciation on your car’s parts and pays the claim after deducting the relevant charges for depreciation. As per the motor policy, for nylon, rubber, plastic parts, tyres and tubes, 50% rate of depreciation is charged. For fiber glass parts, 30% rate of depreciation is charged. Painting charges have a 50% depreciation and other parts are age based So, when a claim is made and repairs are done for various car’s parts, the claim is paid after deducting the relevant rate of depreciation.

The amount of compulsory deductible and voluntary excess: There is a component of compulsory deductible in your car insurance policy. This deductible represents the amount of claim which is payable by you whenever a claim is raised on the insurance company. So, when you claim, the compulsory deductible is deducted from the claim amount and the rest is paid. Another concept is voluntary excess. Like compulsory deductible, voluntary excess also represents the portion of the claim which is payable from your pockets. The only difference is that compulsory deductible is mandatory and every policy has a limit of this deductible. In case of voluntary excess, the option of choosing the amount depends on the customer. The customer might or might not choose voluntary excess. If a voluntary excess is chosen, the company would also deduct the voluntary excess limit and pay you the remaining claim.

Weren’t these deductions justified? Your motor insurance policy is a contract of indemnity. It is due to this principle that the insurance company compensates the value of the actual loss suffered. This actual loss is calculated after taking into consideration the above-mentioned factors. These factors dictate the amount of claim which would be paid to you by your insurance company. So, the next time you raise a motor insurance claim, know that you would not get the entire claim raised. Deductions would be made from your claim amount for the above-mentioned factors. So, know the rules of your motor insurance claim settlement so that when you receive the claim, you don’t feel cheated.