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What is an Excess for Car Insurance and How Does it Work?

If you’re looking into vehicle insurance for your personal or company car, you may have come across the term “excess”. We discuss everything you need to know about what an excess is and how it works in South Africa.

What is an Excess?

Car insurance excess is the first amount payable by you if you’re in an accident. Excess is the uninsured portion of your loss and is payable by you when submitting a claim. Excess is usually paid to the repair shop fixing your car. Once the shop has completed its work, payment needs to take place.

You usually pay the excess directly to the repair shop only once the job is completed. Excess is the shield protecting insurance service providers in South Africa against fraudulent claims and claims for minor incidents. You will need to pay the excess, even if you are not responsible for the cause of the accident.

If you are an inexperienced driver, your excess will be higher in comparison to that of an experienced driver. Inexperienced drivers also pay higher premiums for short-term insurance. It’s a smart idea to get an insurance quote to find out what amount of compulsory insurance excess you need to pay.

What You Should Know About Your Car Insurance Excess

Car insurance excess is one of the biggest deciding factors when buying new car insurance cover. The general rule of thumb is that low excess equals higher premiums. Conversely, higher excess equals lower insurance premiums. Most insurance service providers offer a window for negotiating your excess.

Will I Pay More Excess if I Drive An Expensive Car?

If you drive a high-value or luxury type of vehicle, you will pay a higher excess amount.

How Can Car Insurance Excess Affect Me When I Claim?

If you aren’t cognisant of your excess amount and how it is calculated, you might get a rather unpleasant surprise when you claim. To avoid that, you can ensure you know precisely how much excess you need to pay and that you can afford it. You can find details about your excess in the policy documents.

When claiming, you might find that your out-of-pocket if the excess is too large and you don’t have enough funds to pay. Ill-informed decisions at the start of your car cover could mean financial struggles with future claims.

Why Would I have to Pay an Amount Even Though I have Comprehensive Cover?

Because an excess protects car insurance providers and is supported by law in South Africa, it’s unavoidable. Even the most comprehensive policies will have an excess amount the insured is responsible for paying when claiming. The question should not be if you have to pay, but rather how much.

Not all excesses are alike or even calculated in the same way. If you’re smart about things, you could choose the right policy that gives you the type of excess best suited to your needs. You could end up saving money on monthly premiums without having to pay a massive sum of money if you get into an accident.

What’s the Difference Between Compulsory Excess and Voluntary Excess?

Compulsory excess is determined by your insurer, whereas a voluntary excess is an amount set or volunteered by the insured person.

Compulsory excess applies to your insurance policy. Your insurance service provider should explain your excess structure to you. Compulsory excess insurance amounts may vary depending on the age group you fall into.

In many instances, the insurance company charges higher excess amounts for younger drivers. Older and more experienced drivers usually pay more competitive rates for excess. Some insurance companies waive excess altogether for individuals 50 years of age and older.

Bigger excess amounts may be charged for younger drivers because they are considered high-risk. High-risk individuals usually attract additional compulsory excesses.

How Does Voluntary Excess Differ From Compulsory Excess?

Voluntary excess is just that – voluntary! With voluntary excess, you set your own amount of excess you will pay. The amount is added to your compulsory excess, over and above the stipulated compulsory excess amount.

Your insurance company can explain how these additional excesses work. Voluntary excess amounts lower your monthly premiums. Ensure you can afford the additional cost before making this decision.

Voluntary excess is an effective way to make your premiums more affordable. For comprehensive vehicle insurance, the insured needs sufficient funds to pay the shortfall when they claim. If anything happens, they will pay out a larger amount of money for both the voluntary and the compulsory excess.

Insurers list excesses on your policy documents and sometimes include it in car cover quotes.

Types of Excess for South African Car Insurance

There is no one size fits all excess amount. Different policies have different kinds of excesses for their short-term insurance products. These usually apply to a wide range of situations. Some of the key excesses applied to your comprehensive car insurance include:

  • Standard Excess or Basic Excess

This is usually an amount agreed on by the insurer and the insured. The excess will contribute towards claims you make. Insurers apply standard excess as a single entity or together with another excess amount.

  • Age Excess

This excess is an additional amount added to the standard excess amount. It often applies to drivers who are 25 years and younger when claiming.

  • Excess for Inexperienced Drivers

This excess is added to your basic excess. The insurer usually applies this excess to drivers with 2 years and less experience.

  • Unlisted Driver Excess

This amount is added onto your standard excess and applies to those drivers that are under 25 years old and are not listed as designated drivers in the policy document.

  • Special Excess

This amount is for drivers that have specific arrangements for eventualities overs and above circumstances agreed on.

Can I Get A Refund for My Excess?

Certain conditions need to be met when claiming a refund. These apply to specific circumstances.

  • The first case scenario is having the excess waived. It’s important that you are able to prove that you were not the person responsible for the accident. You may need to furnish your insurer with the details of the party responsible’s insurer.
  • The second case scenario is when you insure against having your excess waived. If a flood or fire damaged your car while parked, you will still need to pay the excess amount. Some South African assurance companies provide cover for these eventualities.

Find Out More About Your Car Excess Today. Compare Excesses for an Informed Decision.

Make that informed decision today and compare car excess quotes. Auto & General car insurance and ABSA idirect car insurance are two service providers who offer varying but competent plans with adequate excesses. You can choose additional excess from Auto & General or ABSA idirect, which will allow you to take control over the cost of your premiums and car excess.

Make an informed decision today! Get a quote by filling in our online form, and a reputable South African insurer suited to your needs will contact you shortly.

DISCLAIMER: The information that has been provided in this article is for informational purposes only. It should not be construed as legal, medical, or financial advice. Facts in this article are correct at the date of publication.

Sources: businesstech; admiral; motorhappy;

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