Experience choosing deductible level when buying auto insurance in 2023

Have you heard about auto insurance policies? How does it affect compensation when you use insurance? Let’s find out with CarOn through the following article!

What is the insurance deductible?

If you are learning about insurance concepts, the insurance deductible will be an important term you need to understand before buying insurance. The insurance deductible is understood as the amount of money that the insurance buyer will have to pay when an incident occurs. This is clearly stipulated in the insurance contract with the deductible expressed in a specific amount or % of loss.

There can be 2 cases after applying the insurance deductible:

Case 1: Amount of loss > Deductible level → the insurance company will compensate an amount equal to the amount of loss within the terms of the insurance scope after deducting the fee specified in the insurance contract.

Case 2: Amount of loss < Deductible level → the insurance company will not need to compensate for the loss.

Each insurance company will apply a minimum car insurance deductible in each policy. Insurance buyers can choose a higher deductible but cannot lower it lower. Insurance deductibles apply to auto insurance, property insurance, technical insurance, liability insurance, cargo insurance…

Meaning of insurance deductible

The insurance deductible level has two practical meanings, including:

  • Reduce costs that the insurance buyer must bear
  • Minimize insurance claims (due to small losses, not seriously affecting the insurance buyer’s finances)

What is the benefit of the insurance deductible?

Reduce insurance costs

The deductible has become a mandatory fee when buying auto insurance since 2019. (According to Circular 50/2017/TT-BTC and Decree 73/2016/ND-CP). The higher the deductible level customers choose, the lower the insurance premium rate.

For example, when there is no deductible, the insurance premium is 13.68 million VND. Customers who choose an exemption level of 1 million VND will have an insurance premium of only 11.34 million VND. Customers who choose an exemption of 2 million VND will have an insurance premium of 10.44 million VND.

“Peace of mind” fee

When participating in traffic, drivers will not be able to predict risks or accidents that may occur. Therefore, auto insurance acts as a “talisman” to help minimize possible losses.

For example, if you are a car owner, you buy insurance with a selected deductible of 2 million VND, but unfortunately an accident occurs that causes repair costs to reach hundreds of million VND, then you will benefit quite a lot if you only need to 2 million VND and the remaining loss will be paid by the insurance company.

Of course, no car owner wants to have an accident to enjoy insurance, but the insurance deductible is also considered a fee to “buy peace of mind” for customers while using the car.

How to choose car insurance deductible?

Currently, most insurance companies have two types of insurance deductibles, including: deductible and non-deductible.

Exempt usually with deductible: If a loss occurs and the repair cost is equal to or below the deductible, the insurance user will pay it themselves. If the loss is higher than the deductible, the insurance company will pay the remaining costs after deducting the deductible.

Exemption is usually not deductible: If a loss occurs and the repair cost is equal to or below the deductible, the insurance user will pay it themselves. If the loss is higher than the deductible, the insurance company will only pay the full cost of the damage.

For example: Mr. A participates in auto insurance and chooses a deductible of 2 million VND.

*If loss occurs equal to or less than 2 million VND With both the regular exemption with deduction and the regular exemption without deduction, Mr. B still has to pay the entire repair cost.

*If word loss occurs 2 million VND or more:

+ Exemption with deductible: Mr. B will pay 2 million VND and the insurance company will pay the remaining costs.

+ Non-deductible exemption: The insurance company will pay all costs, Mr. B does not have to pay any fees.

In short, based on the benefits of the deduction and your daily car usage habits, you will choose the appropriate exemption type and deduction level.

Deductible levels of some insurance packages by company

It can be said that the car insurance deductible level is of most interest to users, because it is one of the important types of insurance that helps drivers a lot. Here is some important information you need to know:

– Do not apply the deductible (1,000,000 VND/case), for vehicles for transport business: Meaning under 1 million VND, the insurance company will not file an insurance application, over 1,000,000 VND, the insurance company will not apply. The insurance company will pay it all.

– Do not apply the deductible (500,000 VND/case) for vehicles not used for transportation business: Meaning under 500,000 VND, the insurance company will not file an insurance application, over 500,000 VND, the insurance company will pay in full.

However, it will depend on each insurance company whether the company applies an exemption with a deductible or an exemption without a deductible. Currently, many insurance companies are applying a non-deductible exemption in this type of car insurance.

Understanding the diverse needs of car users in Vietnam, many insurance companies offer packages with deductibles ranging from 1-10 million VND, depending on the car’s value and financial ability. of cutomer. Typically, insurance companies with the best car insurance deductibles are: Bao Viet, Liberty,… Besides, the car insurance packages here also offer many other special benefits to buyers when they have Widest insurance coverage – including water damage insurance, repaired at genuine garages nationwide.

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