A deductible is the part of a covered loss that you pay yourself before your insurer pays the rest. If your car repair costs Tk 80,000 and your deductible is Tk 5,000, the insurer pays Tk 75,000 and you pay Tk 5,000.
That small difference surprises many people at claim time. It is easy to avoid if you understand it before you buy. This guide explains what a deductible is, how it works across different types of general insurance such as motor, health and fire policies, and how to choose an amount that fits your budget. It is written for car owners, families and small business owners.
A deductible is a set amount, or sometimes a percentage, that you agree to pay towards a covered loss. The insurer takes it off the claim and pays the balance. Think of it as your share of the cost, agreed before anything goes wrong.
You may also see the word “excess” in policy documents. In most cases it means the same thing. Some insurers say “deductible” and others say “excess,” so check the wording in your own policy. In Bangla, many people simply use the English word.
Why do insurers use deductibles? They discourage very small claims, which keeps premiums lower for everyone. They also give you a reason to look after your car, home or health. In return, you usually pay a smaller premium.
One thing to watch: depending on the policy, the deductible may apply to every claim, or only once during the policy year. Your policy schedule will tell you which.
In one line: the deductible is what you pay first, and the insurer pays what is left.
Every claim follows a similar path:
Here are two examples. The numbers are only for illustration and are not real policy figures.
| Motor repair | Hospital bill | |
| Total covered cost | Tk 80,000 | Tk 1,20,000 |
| Deductible | Tk 5,000 | Tk 20,000 |
| Amount left after deductible | Tk 75,000 | Tk 1,00,000 |
| Co-payment (your extra share) | None | 10% of Tk 1,00,000 = Tk 10,000 |
| Insurer pays | Tk 75,000 | Tk 90,000 |
| You pay | Tk 5,000 | Tk 30,000 |
Notice that in the hospital example you pay two things: the deductible and a co-payment. Not every plan has both, so ask.
Two more situations are worth knowing. If your loss is smaller than your deductible, say a Tk 4,000 repair with a Tk 5,000 deductible, the insurer pays nothing. And if your loss is bigger than your policy limit, you pay the extra amount as well.
Policies describe deductibles in different ways. These are the main ones:
Per-claim deductible: You pay it each time you make a claim. This is common on motor and property policies.
Annual (aggregate) deductible: You pay it once during the policy year. After you reach it, the insurer pays from the first taka for the rest of that year. Some health plans work this way.
Fixed-amount deductible: A set sum, such as Tk 5,000, no matter how big the claim is.
Percentage deductible: A share of the claim or of the sum insured. A bigger loss means a bigger deductible.
Compulsory deductible: Set by the insurer. You cannot remove it.
Voluntary deductible: An extra amount you choose to carry in return for a lower premium.
Which types you will see depends on the insurer and the product, so check your policy schedule.
Always confirm the details with your insurer, because wording differs from company to company.
| Insurance type | Does a deductible apply? | What to check |
| Motor (own damage / comprehensive) | Can apply | Deductible amount, fixed or percentage, and whether it changes by type of claim |
| Motor liability (third party) | Not usually the main feature | Whether it is required today, and what it covers |
| Health | Varies by plan | Deductible-based reimbursement or fixed hospital cash, co-payment, yearly limits |
| Fire, property and cargo | Can apply | Sum insured, policy type, exclusions |
| Life | Usually not | Life cover pays a set benefit, so it is not a loss-sharing product |
Motor insurance. Third-party motor insurance was abolished in December 2020, after the Road Transport Act 2018 removed the requirement to have it. The Insurance Development and Regulatory Authority (IDRA) relaunched it in August 2025 as “Motor Liability Insurance” on a pilot basis. Reports in early 2026 said it was still not compulsory and sales were low. A draft law to make motor insurance mandatory again, with fines of up to Tk 3,000, was reported earlier. Rules can change, so check the current position. Deductibles matter mostly when comparing comprehensive and third-party motor insurance, because they apply primarily to own-damage cover where the insurer pays for repairs to your own vehicle.
Health insurance. Few employers in Bangladesh offer health insurance, and comprehensive individual plans are limited. Before you buy, find out what kind of plan you are getting. Some reimburse your bills after you pay a deductible or co-payment. Others pay a fixed amount, such as hospital cash, and work differently.
Fire, property and cargo. For these policies, the type of cover and the sum insured often matter more than the deductible. One review of 83 air cargo policies after the Dhaka airport cargo village fire found that about 70% were “Air All Risk” and about 30% were “Air Risk Only.” The second type does not cover fire in a warehouse. The lesson is simple: the deductible is only one line in your policy. Read the whole schedule.
Life insurance. Life policies usually pay an agreed benefit and do not use deductibles. Confirm this with your insurer.
Many Bangladeshi insurers offer Takaful (Islamic insurance), which is based on shared risk. The cost-sharing terms can differ from conventional policies. Ask for the exact wording in writing, and have it explained before you sign.
These words often get mixed up. Here is how they differ.
| Term | What it means | When you pay | Simple example |
| Premium | The price of your policy | Before or during the policy period | Tk 12,000 a year |
| Deductible | Your first share of a covered claim | When you claim | Tk 5,000 per claim |
| Excess | Another word for deductible in many policies | When you claim | Tk 5,000 per claim |
| Co-payment | A percentage of the claim you share with the insurer | When you claim | 10% of the bill |
| Sum insured | The most the insurer will pay | Not a payment. It is a limit | Tk 10,00,000 |
There is a trade-off between the premium and the deductible. A higher deductible usually lowers your premium, because you are taking on more of the risk. A lower deductible usually raises it. Neither choice is wrong. What matters is that you can afford to pay your share on a bad day.
A simple rule can help: choose the highest deductible you could pay from your savings without stress. Do not choose one so high that you would avoid making a valid claim.
If you are an individual or family, think about:
If you run a small business, think about:
| Choose a lower deductible if | Choose a higher deductible if |
| You have little savings set aside | You have a solid emergency fund |
| Small claims are fairly likely | You rarely claim |
| A surprise bill would be hard to pay | You want to keep your yearly premium down |
| You prefer predictable costs | You are comfortable carrying more risk |
This is general information, not personal advice. If you are unsure, talk to a licensed insurance advisor who can look at your situation.
The cheapest policy is not always the best. A low premium can hide a high deductible, low limits or narrow cover.
A report on the Dhaka airport cargo village said the facility carried only Tk 20 lakh in fire cover, which the state insurer said was kept low to reduce premium costs. When the sum insured is far below the real value, your payout can stop at that limit no matter how big the damage. Many property policies also reduce payouts in proportion when you are under-insured, which is known as the average clause.
Make sure the amount, and how it applies, is clearly shown on your policy schedule.
Industry reports have pointed to large amounts of unsettled claims in Bangladesh, and IDRA has said it is stepping up oversight. This does not mean every insurer is slow, but it is a good reason to compare insurers on claim settlement and not only on price. Keep copies of every document and message when you claim.
IDRA has a grievance system for policy holders, and its guidelines call for complaints to be resolved within 90 days. If your insurer does not resolve the issue, you can take it to IDRA.
A deductible is simply your share of the cost when you claim. A higher one can lower your premium, but only if you can afford to pay it when something goes wrong. Before you buy, review a personal and business insurance checklist , ask for the deductible in writing, check the sum insured and read what the policy excludes.
No. The premium is what you pay to buy the policy. The deductible is what you pay when you make a claim. You can have a low premium with a high deductible, or the other way round.
In most policies, yes. Both mean the amount you pay first on a claim. Insurers use the words differently, so read your policy wording to be sure.
It depends on the policy. Some deductibles apply to every claim. Others apply once a year. Some products, such as many life policies, do not have one at all.
No. It is your share of the loss, not a deposit. It is subtracted from the claim amount, so you do not get it back.
Start with your insurer’s complaints process and keep written records. If it is not resolved, you can raise it with IDRA, the insurance regulator, through its grievance system.
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