Automobile insurance, as an important form of insurance, is often necessary when the owner buys a vehicle. However, there are also some complex concepts in auto insurance, such as mandatory deductibles. This paper will make an in-depth analysis from the definition, calculation method and application scope of compulsory deductible.
Definition of mandatory deductible
Compulsory deductible refers to a certain amount of compensation liability that the owner must bear when purchasing auto insurance. In the event of an insurance accident, the insurance company will only compensate for the excess of the deductible part, and the owner needs to bear the compensation responsibility for the deductible part.
How the compulsory deductible is calculated
There are two main ways to calculate the mandatory deductible, one is based on a certain percentage of the price of the vehicle, and the other is based on a fixed amount.
Calculated as a percentage of the price of the vehicle
Calculating the compulsory deductible according to a certain percentage of the price of the vehicle means that the insurance company determines the amount of the compulsory deductible according to a certain percentage of the price of the vehicle. The percentage may vary by region and insurer.
For example, if the mandatory deductible rate in a certain area is 5% and the owner buys a vehicle with a price of $100,000, the mandatory deductible is $5,000.
At a fixed amount
The calculation of compulsory deductible by fixed amount means that the insurance company determines the amount of compulsory deductible according to the fixed amount. The exact amount may vary by region and by insurance company.
For example, if the mandatory deductible in a certain area is $1,000 and the owner buys a vehicle priced at $100,000, then the mandatory deductible is $1,000.
The scope of compulsory deductibles
The compulsory deductible is applicable to the compulsory traffic accident liability insurance and commercial insurance in the vehicle damage insurance, third party liability insurance and so on. In the event of an insurance accident, the insurance company will only compensate for the excess of the deductible part, and the owner needs to bear the compensation responsibility for the deductible part.
Compulsory traffic accident liability insurance
Traffic accident liability compulsory insurance is a kind of basic insurance that car owners must buy, and its main liability scope includes personal injury and property loss caused by traffic accidents. In the traffic accident liability compulsory insurance, the amount of compulsory deductible is fixed, and the owner must bear a certain amount of deductible.
Commercial insurance
Commercial insurance refers to a kind of automobile insurance voluntarily purchased by the owner, and its scope of liability mainly includes vehicle damage insurance, third party liability insurance, whole vehicle theft insurance, driver liability insurance, passenger liability insurance and so on. In commercial insurance, the amount of the compulsory deductible is determined based on a certain percentage or fixed amount of the vehicle price, and the owner must bear a certain amount of the deductible.
The advantages and disadvantages of mandatory deductibles
As an important concept in automobile insurance, compulsory deductible has certain advantages and disadvantages.
advantage
The compulsory deductible can effectively restrain the owner’s insurance claim behavior and reduce the insurance company’s payment pressure. At the same time, mandatory deductibles can also encourage car owners to drive more carefully, reducing the incidence of traffic accidents.
shortcoming
The mandatory deductible also has some disadvantages, the most important of which is that it may make the owner bear too much compensation liability when the insurance accident occurs, increasing the economic burden of the owner. In addition, the calculation method and amount of mandatory deductibles may differ between different regions and different insurance companies, making it difficult for car owners to compare and choose.
Conclusion
Compulsory deductible is an important concept in auto insurance, which is defined as a certain amount of compensation liability that the owner must bear when purchasing auto insurance. There are two ways to calculate the compulsory deductible: according to a certain proportion of the vehicle price and according to a fixed amount. The compulsory deductible is applicable to the compulsory traffic accident liability insurance and commercial insurance in the vehicle damage insurance, third party liability insurance and so on. Owners need to choose their own insurance products according to their actual situation, and understand the relevant knowledge of mandatory deductibles, so that they can report and settle claims in time after an accident. As an important concept in automobile insurance, compulsory deductible has certain advantages and disadvantages, and owners need to consider comprehensively when choosing insurance products.
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