A deductible is the part of a covered loss that you pay yourself before your insurer pays the rest. To calculate it, take your covered loss and subtract the deductible. What is left is what the insurer pays. For example, if your loss is Tk 100,000 and your deductible is Tk 10,000, the insurer pays Tk 90,000.
That sounds easy. But when you open a real policy schedule in Bangladesh, you may find words like excess, co-payment and depreciation sitting side by side, and it is hard to tell what you will actually pay on claim day. This guide explains each term in simple language, shows the formula step by step, and walks through examples in Taka for a car, a hospital stay and a shop. Whether you drive a car, look after a family or run a small business, you will be able to work out your own number before you buy or renew.
Think of a deductible as your “first share” of any claim. Imagine you and a friend take a rickshaw every day, and you agree that you will always pay the first Tk 20 while your friend pays the rest. A deductible works the same way. You pay the first part of a covered loss, and the insurer pays what remains.
Why does it exist? It stops very small claims from clogging the system, and it gives you a good reason to take care of your car, your home or your shop. In return, insurers usually charge a lower premium when your deductible is higher.
Different insurers use different words for similar ideas. Here is what the common ones mean:
Many motor policies in Bangladesh also reduce the payment on certain parts, such as rubber, nylon and plastic, by a set percentage. The rates differ by insurer and by vehicle age, so always confirm them in your own policy or tariff.
A fixed deductible is a set sum, such as Tk 5,000 per claim. It stays the same whether the loss is Tk 20,000 or Tk 200,000. A percentage deductible is a share of the loss or of the sum insured, such as 5%. The bigger the loss, the more you pay. Always check which one your policy uses, because the same “5” can mean very different amounts.
A compulsory deductible is required by the insurer. A voluntary deductible is one you choose to add on top, usually to get a lower premium. If you choose a voluntary deductible, remember that it is added to the compulsory one, so your total share on each claim goes up.
Most deductibles apply per claim. You pay them each time you make a claim. Some policies, mainly in health insurance, use an annual deductible. You cover your own costs until they reach a set amount during the policy year, and only then does the insurer start paying. Read the schedule carefully to see which one you have.
Insurer pays = Covered loss − Deductible
“Covered loss.” This is only the part of the damage that your policy actually covers, not the full bill. If a repair bill is Tk 80,000 but Tk 10,000 of it is not covered, start with Tk 70,000.
Your share = Covered loss × Deductible %
For example, suppose your covered loss is Tk 200,000 and your deductible is 5%. Your share is Tk 200,000 × 0.05 = Tk 10,000. The insurer pays Tk 190,000.
The deductible is often not the only thing taken off. Other items that can reduce your payout include:
The order in which these are applied can change your final amount. Some policies take depreciation off first and then the deductible; others do it differently. Your policy wording explains the order, so read that section before you decide.
All figures below are made up to show how the maths works. They are not real tariffs. Your insurer’s numbers will be different.
Your car is hit in an accident and the repair bill is Tk 150,000.
Insurer pays: Tk 150,000 − Tk 18,000 − Tk 5,000 = Tk 127,000. You pay: Tk 23,000.
You are admitted to hospital for four days and the total bill is Tk 200,000.
Insurer pays: Tk 180,000 − Tk 18,000 = Tk 162,000. You pay: Tk 20,000 + Tk 18,000 = Tk 38,000.
Notice that the room-rent cap cost you more than the co-payment did. That is why checking cabin sub-limits and hospitalization costs in Bangladesh matters before you choose a plan.
When arranging shop, office, and warehouse insurance in Bangladesh , suppose a fire damages the stock in your shop. Your stock was insured for Tk 2,000,000, which matches its real value, and the loss is Tk 1,200,000. . Your policy has a fixed deductible of Tk 50,000.
Insurer pays: Tk 1,200,000 − Tk 50,000 = Tk 1,150,000. You pay: Tk 50,000.
One warning for shop owners: if your stock is worth more than the amount you insured it for, the insurer may reduce the payout in proportion. This is often called underinsurance, and it can hurt more than the deductible.
| Example | Loss | What you bear | Insurer pays |
| Motor | Tk 150,000 | Tk 23,000 (depreciation + excess) | Tk 127,000 |
| Health | Tk 200,000 | Tk 38,000 (room cap + co-pay) | Tk 162,000 |
| Shop fire | Tk 1,200,000 | Tk 50,000 (fixed deductible) | Tk 1,150,000 |
In general, a higher deductible means a lower premium, and a lower deductible means a higher premium. You are choosing between paying less now and paying less later. The size of the discount differs by insurer, so ask for quotes with the discount shown in writing instead of relying on a rule of thumb.
Common mistakes to avoid:
If you drive in heavy Dhaka traffic where minor damage is common, a lower deductible often makes more sense. If you have a family member with a long-term health condition, a lower deductible or lower co-pay can save a lot over a year. If you own a shop with a healthy cash reserve, a higher deductible can reduce your premium while you keep the cover for the big, unlikely losses.
These three are easy to mix up, so here they are side by side.
| Deductible | Co-payment | Sum insured | |
| What it is | A set amount or percentage you pay first | A percentage of each bill you share | The most the insurer will pay |
| When it applies | On each claim, or each year | On each covered bill | At the upper end of large claims |
| Who pays | You | You and the insurer share | The insurer, up to the limit |
The most common confusion is thinking that a big sum insured means you will get that whole amount. It does not. The sum insured is a ceiling. Your deductible, co-payment and sub-limits all work before you ever reach it.
Under current insurance regulations in Bangladesh, the Insurance Development and Regulatory Authority (IDRA) oversees insurers under the Insurance Act 2010. The Act sets a 90-day limit for settling a claim once you have submitted all the required documents. This rule is mostly talked about in connection with life insurance claims after a policy matures. IDRA has also issued guidelines saying insurers should resolve complaints within 90 days.
A good deductible means little if the claim is not paid on time. IDRA data reported in the press shows that claim settlement rates among life insurers fell from 85% in 2020 to about 66% in 2025. That figure is about life insurance, not motor or fire cover, but it is a reminder to look at an insurer’s claim record before you buy. Ask how quickly it pays, and ask friends or colleagues about their experience.
Start with the insurer’s own complaints or claims team and keep everything in writing. If you do not get a fair answer, you can take your complaint to IDRA through its grievance system.
Commercial fire insurance policies often use a fixed deductible for each loss, and sometimes a higher one for certain risks such as theft or flood. Similarly, marine cargo policies may apply a deductible to each shipment. Engineering policies, which cover machines and construction work, often set the deductible based on the type of equipment. Ask your insurer exactly which perils carry a different deductible.
Here are the three things to remember:
Before you buy or renew, ask your insurer to show you the deductible clause in writing, then get quotes at two or three deductible levels and compare them calmly.
In most cases, yes. Both mean the amount you pay first on a claim. Motor policies often say “excess,” while other policies say “deductible.” Read the schedule to see how your insurer uses the words, because small differences can exist.
It depends on the plan. Many health policies use a co-payment, where you pay a percentage of each bill. Some also use a deductible or sub-limits, such as room-rent caps. Check the benefits table before you buy.
Usually only at renewal, and the premium will go up. Insurers rarely change the deductible in the middle of a policy year. Ask for quotes at different deductible levels about a month before your policy ends.
It depends on how the claim is handled. In a motor claim, you often pay your share directly to the workshop when you collect the car, and the insurer pays the rest. Confirm the process with your insurer before repairs begin.
Third-party cover pays for injury or damage to other people, so a deductible usually does not work the way it does in comprehensive cover. Policy terms can still differ, so check your own wording.
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