Car owners looking to buy mechanical warranty must invest time in searching various vehicle insurance policies across insurers online. The hunt for the best car warranty doesn’t end there. Vehicle owners must first assess their vehicle usage, needs and value as well as their budget so they can eventually request and compare quotes from multiple insurers before purchasing a suitable insurance cover.
While buying car insurance online can be a cakewalk, understanding the terminology related to vehicle insurance policies may not be easy for everyone. Some car owners may have to look at the policy disclosure statements (PDS) back and forth to comprehend the inclusions and exclusions of their car insurance policies.
If you are a vehicle owner struggling to decode some terms in the PDS contact your insurer for assistance. Car insurance excess is a term that is commonly used in South Africa, and it refers to the amount of money that you will have to pay out of your own pocket if you make a claim on your car insurance policy. Understanding car insurance excess is essential because it can help you determine how much you will be required to pay in the event of an accident or other insured event. In this article, we will cover the basics of car insurance excess in South Africa.
What is car insurance excess?
Car insurance excess is a fixed amount of money that you will have to pay if you make a claim on your car insurance policy. This amount is determined by your insurance company, and it is usually specified in your policy documents. The purpose of car insurance excess is to ensure that you have a financial stake in your insurance claim, and it helps to prevent frivolous or fraudulent claims.
Types of car insurance excess
There are generally two types of car insurance excess in South Africa, namely:
- Standard excess: This is the excess amount that is applied to all claims made on your car insurance policy. It is a fixed amount, and it is determined by your insurer based on factors such as your age, driving experience, and claims history. The standard excess is usually specified in your policy documents, and it is typically between R2,500 and R5,000.
- Voluntary excess: This is an additional excess that you can choose to pay when you take out your car insurance policy. The voluntary excess is over and above the standard excess, and it is entirely optional. By choosing to pay a higher voluntary excess, you can lower your monthly insurance premiums. However, it is essential to remember that if you do make a claim, you will have to pay both the standard and voluntary excess.
How does car insurance excess work?
Car insurance excess works by shifting some of the financial risk of an insured event from the insurer to the policyholder. In other words, if you make a claim, you will be responsible for paying the excess amount before your insurer pays out any money. For example, if you have a car insurance policy with a standard excess of R3,000 and you make a claim for R10,000, you will have to pay R3,000 out of your own pocket, and your insurer will pay the remaining R7,000.
It is important to note that the excess amount only applies to the amount that you are claiming. For example, if you have a standard excess of R3,000 and you make a claim for R5,000, you will only have to pay R3,000, and your insurer will pay the remaining R2,000.
When do you have to pay excess car insurance?
You will only have to pay car insurance excess if you make a claim on your policy. If you do not make a claim, you will not have to pay any excess. The excess amount is typically deducted from the amount that your insurer pays out in the event of a claim.
How can you reduce your car insurance excess?
There are a few ways that you can reduce your car insurance excess, including:
- Choosing a higher voluntary excess: As mentioned earlier, you can choose to pay a higher voluntary excess to lower your monthly premiums. However, it is essential to make sure that you can afford to pay the excess if you do make a claim.
- Building up a no-claims bonus: Many insurers offer a no-claims bonus, which rewards policyholders who do not make any claims on their policy. Over time, your no-claims bonus can help to reduce your standard excess.
- Installing security features: By installing security features such as an immobilizer or tracking device, you can reduce the risk of theft or damage to your vehicle, which can help to lower your excess.
Are excesses paid upfront or in installments?
Usually, the excess is paid in a lump sum. However, if you have financial constraints, you can ask your insurer if they can accommodate your request to pay in installments or extend the payment date. However, not all insurers may oblige such a request.
While these are a few common questions about car insurance excesses, you can easily reach out to your insurer using car warranty online support in case of queries. Whether or not your insurer is the best mechanical warranty provider, there can still be multiple ways to seek assistance when required. Find the contact information in your policy’s PDS or your insurer’s official website to know all the available channels to get help.
