Car insurance excess and how it works

So, if you make an ill-informed choice at the start of your contract, you may find yourself in for an unpleasant surprise if you ever need to claim from your insurance.

Continue reading to find out just how much car insurance excess can affect you.

What is car insurance excess?

The amount you pay as a client when you are involved in a car accident is known as a car insurance excess. This payment is an uninsured part of your loss, which is payable when you make an insurance claim. This excess will commonly be paid to the garage handling your repair.

This insurance excess must be paid, regardless of the circumstances surrounding the accident. The insurance company uses this claim to dissuade fraudulent or suspicious insurance claims and also to lower premium payments.

Compulsory vs voluntary excess

Compulsory insurance excess is added directly to your insurance policy by your provider. Thus, this type of insurance varies based on the car insured and age group.

Inexperienced or younger drives often have to pay higher compulsory excess amounts than their experienced and older counterparts. Younger drivers are grouped under high-risk individuals and usually have higher excess amounts (and monthly payments!). Similarly, this logic is also applied to high-value luxury cars, as owners of such vehicles also have to pay higher compulsory excess fees.

On the other hand, voluntary excess is the amount you are willingly to choose to pay, above the compulsory excess. This is a smart way of reducing your overall insurance fees. By opting to pay more voluntary excess fees, your insurance provider will usually lower your premium fee. This is because once you increase your excess, you take more of the risk away from the insurance provider. Therefore, the insurance company has to contend with fewer minor claims.

Types of excesses

Your insurance certificate will usually highlight what excess you are liable for. This may vary with your insurance policy and provider. MotorHappy will help you source the best possible insurance for your budget and your requirements, obtaining quotes from some of South Africa’s top insurance providers.

Listed below are some typical excesses that are synonymous with comprehensive car insurance:

• 1. Standard Excess

  A fee agreed by both the insurer and insured to be jointly contributed when a claim is being made, applicable to all claims as a basic excess. Can apply with a different excess or standalone.

• 2. Age

  Drivers under 25 years are liable to pay this excess upon making a claim. Some of the kinds of excess that apply to drivers under 25 include:

  1. Inexperienced Driver Excess
     This applies to drivers over the age of 25, but with less than 2 years of driving experience.
  2. Unlisted Driver Excess
     This applies to drivers under 25 and not covered under this policy.

• 3. Additional excess

  In some cases, additional excesses are required to be paid (over and above) the basic excess, in certain events, depending on your agreement with your insurance provider.
  Example of an additional excess:
  Incident driver has had their license for less than 2 years.

Understanding how car insurance excess works

To strengthen the way car insurance works, let's consider an example. Let's say your insurance policy has an excess of R25,000 and you happen to be in an accident that results in a total loss of R100,000. Your insurer will retain the first R25,000 and give you the remaining balance of R75,000.

Take another scenario in which you are involved in an accident with damages worth R6,000. If you have an insurance excess of R500, your insurer will pay R5500 with you having paid the excess to the garage fixing your car.

When you reclaim your excess

So, can you get a refund on your excess? Yes, you can. However, certain conditions have to be fulfilled. Here are two ways this can be done:

• Waiving the excess

  If requested by the client, most providers will waive the excess. Here, the client will demonstrate that they were not responsible for the accident and will tell the provider who was and how to reach them.

  For damages on a parked car as a result of fire or flood, the client is still liable for a basic excess fee.

• Insuring against your excess

  You can opt for an excess insurance policy to cover you in the event that you make a claim. To get the best out of this, consider the cost of paying more voluntary excess and the cost of the insurance policy. For example, if you take an excess insurance policy worth R600 to cover an excess amount of R12,000. You should consider if the increase in the excess amount saved is greater than the R600 cost of the excess insurance policy.

Some insurance providers will help you recover some of your excess for free through their legal department. However, be sure that this process is enacted immediately from the party responsible so that you will be wholly refunded once the process has been concluded.