Why Do I Pay Car Insurance Excess When I Pay a Monthly Premium?
Many people ask the questions, “Why do I need to pay excess when I already pay my car insurance premium every month? What is car insurance excess? How much is car insurance excess? How can I get out of paying excess altogether?”. Let’s take a look at all the questions you may have when it comes to car insurance excess:
The Basics of Excess
Excess is the payment that you agree to pay before the insurance company pays for the rest of the repairs on the claim. This is usually a fixed amount and is always agreed upon the signing of your policy with the insurance company. If your car gets damaged in an incident, you will pay the excess let’s say it’s R4000 but the damage to your car is R20 000. Your insurance company will then pay the outstanding R16 000. The insurance company’s payment should always be greater than your excess payment, otherwise, it’s not worth claiming.
Why Am I Paying Excess in the First Place?
You pay a monthly car insurance premium so why do you still have to pay excess when you claim? Insurance companies want the consumers to pay excess because it discourages fraudulent claims, this is because the consumer is forced to make a payment from their own pocket so they are less likely to lie about a claim. It also discourages the insured from claiming for small claims as this would cause insurance companies to make a loss.
So you have 2 options: (1) to take a higher excess (you will pay more when you have to claim) and this will lower your monthly premium or (2) you can take a lower excess but your monthly premium will be higher.
This all depends on how much risk you are willing and able to take on. With a higher excess, you need to make sure that you have enough money in savings to pay the lump sum in case of a car insurance claim.
Everything You Need to Know About Excess
Firstly, if you have insurance and you don’t know anything about your current excess then get out your policy document, this is the document that you get when you sign up with an insurance provider. Find the section with excess in it to make sure you know exactly what you are liable for in case of an accident and you need to claim.
You also need to make sure you compare car insurance premiums as well as the excess that the insurance company is offering so that you can see which insurer is actually the best value for your money. You can compare car insurance quotes here:
If you are in an accident that wasn’t your fault at all, you will most likely have to pay the excess for your own car upfront to get the car fixed and will be able to claim from the guilty party to pay back your excess after the fact. Normally your insurance company will pay back your excess that you paid as the insurance company is responsible to claim from the guilty party.
If the guilty party is not insured but you are insured, you will have to pay your own excess and your chances of ever seeing that money again are very slim. The truth of the matter is that 70% of cars on the road in South Africa are uninsured that means that only 30% of the cars on the road actually have car insurance.
In South Africa the law still has not been passed to make it compulsory for drivers to have a minimum 3rd party insurance like many other countries have. This means that all guilty parties are liable for their own damages, but that doesn’t really seem fair if it wasn’t your fault, right?
Many people living in South Africa say that they can’t afford car insurance and that is the reason they don’t own it but if all South Africans were forced to have at least 3rd party insurance all car insurance premiums would be lower and more people would be able to afford it. In some cases consumers have more than one excess that needs to be paid in case of a claim, this is usually enforced for those “high-risk profiles” ie, people that are 25 years old or younger etc.
Other Types of Car Insurance Excess
- Excess that will be enforced if the accident happened at a specific time (high risk times)
- Excess in the event your car is hijacked or stolen
- Excess if you claim for the same event (eg hijacking) twice in 12 months
- Excess if you have an incident outside of the South African borders
- Excess in the event that there was a learner driving at the time of the incident
- Excess if you have been in an accident and had your drivers license for less than 2 years
Have you ever checked your car insurance company’s reviews?
If you have never owned car insurance before you may also end up paying a higher excess or within the first 3 months of signing for that cover. Make sure that you ask your insurance company which excess your have or better yet have a read through your policy document. If there is something you don’t understand in there you are always able to contact your insurance company and ask them what it means.
Make sure that your claim is worth your excess payment. If you can repair the car yourself at a cheaper price than the excess amount we suggest you do that. This also helps as majority of the time when you claim your insurance premium will be pushed up as your risk profile increases for every incident you are involved in.
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