What's a deductible

Published: April 2021 | Updated: August 2023

woman in a yellow dress driving a cabriolet car

Deductible is your financial (EUR) liability in the event of an insured event. When purchasing one of the insurance policies, everyone has a certain amount of deductible, or your share payable upon receipt of the indemnity.

EXAMPLE: You park your car in the supermarket parking lot. Returning to the car you find that your car has scratches on the doors and bumper. Report the case on the insurer's website and go to the service of your choice. A service technician will prepare an estimate of the cost of repairing the damage. Assume that the damage is estimated at 500 EUR. It is written in your CASCO policy that the deductible for damages is 140 EUR. This means that the insurer will pay a maximum of 500-140 = 360 EUR for the service and you will have to pay these 140 EUR yourself.

What are the deductibles in the CASCO policy:

What determines the amount of deductible

When purchasing a policy, you are the one who determines/chooses what this deductible will be. If you choose a higher deductible, it reduces the price of the policy. If you want 0 EUR or 0% deductibles everywhere, then this policy will probably become more expensive.

If you are not at fault for the RTA, then the expenses of your car will be covered by the insurer of the guilty party. Sometimes there may be a situation where you do not have information about who has caused damage to your car, for example, the culprit has left the scene or someone has damaged your car maliciously while the car is parked. Don't worry about it if you have your own CASCO insurance. In this case contact your insurer immediately find out if you need to call the police at the scene and follow your insurer's instructions.

There are cases when the insurer sets additional requirements for you to receive 0 EUR deductible.

ANOTHER EXAMPLE: If your car is coveted among car thieves then the risk of theft 0% is possible only when you install additional security systems in your car (do not worry they will tell you if there is a need to install additional). When it comes to motor insurance the MTPL policy is not deductible. This means that if you are at fault for the RTA then the losses to a third party will be covered by your insurer, but you will not have to pay anything for it.

REMEMBER! If you are often guilty of road traffic accidents, then do not be surprised that your MTPL policy will be much more expensive in the next insurance period because your Bonus Malus class has fallen. Bonus Malus recalculation in Latvia takes place every year on the 15th. in September. The lowest possible Bonus Malus class is 1 and the highest is 17. The higher the Bonus Malus class, the less will be the price of OCTA.

When the deductible is greater than the damage

Let's assume that your CASCO policy states that the deductible for damages is 140 EUR. The same situation in the parking lot when someone has broken the door of your car. Take the car to the service and the expert makes an estimate of the damage, this time the loss is only 100 EUR. In this case, the insurer has nothing to indemnify, because this is included in your participation payment - the cost of damage is below the deductible. You and the insurer will close the service bill (for 100 EUR) and close the case.

How to choose the deductible

image showing acontract being signed

People most often choose the standard deductibles offered by insurers or, if an event has already occurred, then choose the 0 EUR deductible next time, because they do not want to make a participation payment anymore when another accident has occurred. If you choose 0 EUR deductible, the policy may be more expensive.

It would be wise to evaluate the difference in the price of a CASCO policy if you ask your insurance specialist to prepare an offer with a standard deductible and a deductible of EUR 0. The difference will definitely be there! The price of a CASCO policy for the same vehicle may differ from one insurer to another.

Also pay attention to the terms of the CASCO policy. There are insurers who offer 0 EUR deductible for the first insured event, but in case of repeated occurrence, a higher deductible is applied. Find out whether the deductible of your new CASCO policy is for the entire insurance period, or if it will change after the first accident.

Do MTPL policies have a deductible

Generally speaking, MTPL policies have no deductible. This means if the insurance the beneficiary is to blame for the accident, the insurance company will compensate the third party for the full amount up to the policy limit (1,050,000 euros for property and 5,210,000 euros for health). So the MTPL policyholder does not have to pay a deductible.

It is important to note that the rules and specifics of MTPL vary may vary between countries.

MTPL, or Land vehicle owner's compulsory civil liability insurance protects the owner of the insured vehicle against liabilities arising from injuries caused to third parties or third parties property damage caused by an accident, involving the insured vehicle.

Do property insurance policies also have a deductible

Property insurance policies may include a deductible. The existence and amount of a deductible will often depend on to the specific terms of the insurance company's policy and the specific concluded property insurance for the contract. For standard home insurance, the deductible can be 0 euros or from 70 euros per insurance case. For properties with a higher value or a higher risk group, such as the property of manufacturing companies, deductibles may be higher, but it will definitely be an individually designed policy offer for which the policyholder will have agreed with the insurer.

Typically, if a property insurance policy has a deductible, the premium (or policy price) may decrease because it means that insurance the beneficiary agrees to share part of the risk by promising to pay part of the compensation amount to the insurers. Accurate deductible amount and conditions for various insurance services providers and policy types may differ, so there cannot be such a clear-cut answer to this question because one will have a deductible in the property policy, while the other may not.

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