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February 12, 2018

Deductible in motor insurance policy

Deductible in motor insurance policy

Insurance policy documents are usually laden with confusing technical jargons and clauses for laymen. In Motor insurance policy document, you will come across a condition “deductible” or “excess”.

Insurance policy documents are usually laden with confusing technical jargons and clauses for laymen. In Motor insurance policy document, you will come across a condition “deductible” or “excess”. In some policy documents, it is mentioned under Special Conditions saying: “The Insured or his representative shall bear AED --- out of the indemnity due in accordance with the terms and conditions.”

A car deductible is an amount of money a customer has to pay in the event his vehicle meets with an accident due to his ‘own fault’ or an ‘unknown fault’ where recovery is not possible. Thus, it is part of the claim which is paid by the policyholder before taking custody of the vehicle after the repairs have been done. Deductibles are provided only in comprehensive coverage policies with a view to lowering the incidence of claims.

In many parts of the world, a customer can usually choose the amount of his deductible based on his budget. He can reduce the insurance premium by raising the deductible amount he is willing to pay and vice-versa.

In UAE the maximum deductible amount is fixed by the Ministry as per the Unified Motor Policy based on the value and type of the vehicle.

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