Car insurance is definitely one of the smartest ways to manage the risk of owning a car and using it in a world where there are several possibilities of damage from accidents and the dangers of theft.
You pay your insurance company to bear the risk while you enjoy the benefits of owning a vehicle.
Like other types of insurance, car insurance can be a little complicated and it is necessary that you understand the provisions of the policy you have and how beneficial it will be when it is time to make claims.
One of the critical features of a car insurance policy is the motor excess or the car insurance excess.
To understand more about car insurance excess here are few basic essential things we ought to know:
What is Car Insurance Excess?
In car insurance, the excess is described as the uninsured portion of the risk. It is the amount you are required to pay towards any claims you make on the policy.
You can also refer to it as the first amount payable by the time of claim.
The way it works is that if your car is damaged in an accident, you are required to pay the excess that was agreed as part of your insurance policy provisions.
The insurance provider will then cover for whatever the other cost of restoring the vehicle to normalcy is.
You need a perfect understanding of this in order to make the right claims and enjoy all the benefits you should have and avoid unexpected costs.
Car insurance excess is a very important aspect of car insurance and it comes with different options designed to fit the specific needs of different policyholders.
As an insured car owner, you need the right understanding of the available options and how they can affect your insurance policy.
Advantages of Car Insurance Excess
Car insurance excess is designed to serve as a form of safety net for both the policyholder and insurance company.
In the event of an accident or other forms of the insured risk, the insurance company is expected to cover for the repair of your car and the excess is the out-of-pocket expense you will have to make to reduce the total amount the insurer will pay to restore your car which is based on agreed terms.
The excess is also designed to contain the premium payments of the policyholders. Without the car insurance excess, you would have to pay more as a monthly premium.
The type of excess you choose will still reflect on the amount you pay as your monthly premium.
The motor excess is also believed to make you conscious of the risk of incurring a damage.
Since it makes you a participant in the repair or replacement of the car, you are expected to be more careful and minimize the risk of any damage or loss.
The advantage of motor excess in the modern insurance policy is that it comes with different options that you can choose depending on how you want to approach it. It is quite flexible.
Typically, the structures are segmented into three major categories such as:
- Basic Excess
- Voluntary Excess
- Additional Excess
- Windscreen Excess
1. Basic Car Excess
As the name implies, this is the basic insurance car excess that policyholders are required to have in order for the insurance company to step in and complete the repair or replacement.
There are various options for this and you have to choose which suits you perfectly. You can decide to pay for a fixed amount in the event of car theft or damage to the vehicle. Your motor excess can also be in the form of a percentage of the claimed amount.
With this option, the applicable excess will increase with the size of the claim in a proportional manner. You have to understand that the higher the amount you choose as basic motor excess, the lower the amount you will have to pay towards the monthly premium.
For those who are particularly risk evasive, the buy-back excess is their best option. This option allows you to significantly reduce the amount of excess you agreed on and pay the high monthly premium that comes with your choice.
2. Voluntary Excesses
The voluntary Excess is an amount you choose to pay as the policy holder to minimalize your premium payment every month.
If your basic excess is R2000 but you can afford R5000.00 in theevent of a claim, you may select a voluntary excess of R3000.00
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3. Additional Excesses
Additional excesses, the second part of a car insurance excess, relates specifically to the details of driver of the car and is based on their experience and insurance history.
There are several factors that will be considered in determining the value of the additional excess such as:
- The age of the driver (drivers who are 25 years old and below are treated differently most of the time)
- The number of years the driver has had a valid license
- Whether the spouse or a relative of the driver will be driving the car
- If there is any satellite tracking device fitted to the car
When all of these factors are considered, the additional excess will be worked out and specified in the insurance policy.
4. Windscreen Excess
This concerns excess of damages that affects your windscreen or glass. Since they are fragile, some policies will allow you to reduce or even waive the excess on any claim you make that relates to the damaged windscreen or windows.
Such considerations may still have an effect on your monthly premium, but it will minimize your out-of-pocket expenses when your windscreen or glass is damaged.
Other Factors in Car Insurance Excess
There are also other factors that are considered in car insurance excess. Some insurance companies have what is referred to as non-nominated driver excess, which applies in situations where the person driving your car is not mentioned in your policy.
They will, of course, ascertain the eligibility of the driver before requesting that you pay the stipulated excess.
Some policies do not have these features but make sure to study your fine print to have complete understanding of what it entails.
Excess is payable during the claim stage and the insurance companies do not always consider who was at fault in the incident.
It is essential that you understand everything about car insurance excess, read your fine print carefully and ask questions to dispel your unfamiliarity.
It is also advisable to hire an insurance broker in South Africa to help you in the process of getting the right insurance policy that will cover your specific needs.