What is Car Insurance Excess?
Excess is a term used throughout the insurance industry. Excess refers to the amount the policy holder is liable for at the time of a claim. Most car insurance policies have a fixed excess fee. For example, if you claim for damages of R15 000 as specified in your policy, you might be liable for the first R1000. Let’s say the damage to your vehicle is R50 000, you still only pay the R1000 as specified in your policy wording. It’s compulsory for your car insurance policy to state exactly what your excess fee is. Sometimes car insurance policies will increase your excess to reduce your monthly premium. It’s always wise to make sure you know exactly what your excess amount will be.
The idea behind car insurance excess is to limit policy holders to claim for unnecessary damages, keeping in mind that if the claim is less than your excess amount, the insurance company will not contribute at all. This is a fair industry practice and will be applicable to most car insurance policies, regardless of the level of cover.
There is a couple of different types of car insurance excesses. For example, the excess amount for theft might be different from the excess amount for accidents. The reason there are different types of excess is the average amount of loss than can be sustained. Let’s say you have a minor “fender bender”, this can possible cost the insurance provider R20 000, you as the policy holder might be liable for R2000 leaving the insurance company liable for R18 000. On the other hand, if your vehicle gets stolen, the car insurance provider will be liable for the total insured value of your vehicle. This makes it a bigger risk; thus the excess amount might be more to subsidise the possible risk.
With the above said, it’s sometimes wise not to claim for small amounts. Most South-Africa car insurance providers offer what they call a “No Claim Bonus” benefit. This benefit will usually reward the policy holder for not claiming. This amount can sometimes be worth the wait. This benefit was designed to encourage the policy holder not to claim unnecessarily.
Car Insurance Excess Waiver
Some of South-Africa car insurance providers offer a benefit called “Excess Waiver” for a small fee added to your existing premium. With this benefit, you can essentially say goodbye to any form of excess. This benefit is usually an optional benefit and can be added to most vehicle insurance policies.
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