What is a deductible in health and motor insurance?

A deductible is a fixed amount you bear before the insurer pays anything: below it, the claim is not paid; above it, the deductible is subtracted from the claim. A health policy can set it per claim, per year or both, and a motor policy can apply one to each claim for damage to your own vehicle. The amount, and how it applies, are in your schedule or Customer Information Sheet.

IRDAI's guidance on the Customer Information Sheet describes a deductible as a specified amount up to which an insurance company will not pay any claim, and which is deducted from the total claim if the claim is larger. It is a fixed sum taken off the claim. A co-payment works differently: IRDAI's CIS format describes it as a specified amount or percentage of the admissible claim that you pay.^{[1, 2]}

How a deductible works in health insurance

A health policy must state any deductible that applies, general or specific. IRDAI's CIS format lets the insurer set it per claim, per year, or both — and the difference matters if you claim more than once in a year.^[2]

• Per claim: The deductible comes off every claim, so two hospital stays in a year mean two deductions.^[2]
• Per year: The deductible applies to the policy year as a whole rather than to each claim; read the clause for how it is counted across claims.^[2]
• Both: Where a policy uses both, read the clause to see which applies first.

If you hold more than one indemnity health policy, you can choose which one to claim under first; that insurer is treated as the primary insurer and coordinates with the others to settle the balance. So check how each policy's deductible treats an amount the other has already paid.^[1]

How a deductible works in motor insurance

A general insurance policy must state any franchise or deductible that applies. One standard car wording says the insurer is not liable, on each and every own-damage claim, for the deductible stated in the schedule. The same insurer's CIS says its compulsory deductible applies only to the own-damage section, sets a higher amount for cars above 1500cc than for smaller cars, and shows it taken off after depreciation in its sample calculation.^{[2, 3, 4]}

Checking a deductible on your settlement

1. 1

   Find the amount and the basis

   Look in the schedule and in the CIS row on financial limits for the amount, and whether it applies per claim or per year.^[2]

2. 2

   Check the order of deductions

   Where several limits apply, the order in which they are applied can change the result; one insurer's own motor sample takes depreciation off before the deductible. Ask the insurer to show the order if it is not clear.^[4]

3. 3

   Check it is written into your policy

   For a health claim that is partly disallowed, the insurer must give full details with reference to the specific policy terms it relied on. A deduction you cannot trace to a clause is worth questioning in writing.^[1]

A deductible is easy to confuse with a co-payment, which is a share of the admissible claim, and a sub-limit, which is a cap on one item. The three side by side works through one example.

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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