Vehicle insurance policies have a compulsory 'deductible'- an arrangement whereby the claim amount up to a pre-specified limit has to be borne by the policyholder. This limit is. Rs 50 for two-wheelers, Rs 500 for private cars up to 1,500 cc and Rs 1.000 for private cars over 1,500 cc. So, on a standard policy, for a Rs 500 two-wheelers claim, Rs 50 will be paid by the policyholder and Rs 450 by the insurer.

Insurers offer discounts on premiums to policy holders who opt for a higher deductible, There's a catch, though. When you increase the deductible, you effectively transfer a greater amount of risk to yourself than you would otherwise do under the standard policy, the reward for which is a fall in premium. As the deductible increases, the premium falls. It might seem like a strategy to save premiums, but remember you're taking on greater risk. It's a cost-benefit trade-off, and you have to find your comfort level