Car Insurance Excess Cover – Explained

What is insurance excess and why should you care about it? Well firstly I’ll answer the second question first: Sorry that sounds terribly confusing but I’m actually trying to help you. If you don’t pay attention to your insurance company’s excess policy and you think you have a great deal on the monthly premiums, you could be in for a hefty expense and a nasty surprise when the time comes for you to make a claim. So pay attention to what your excess clause says as its money you are going to have to pay from your own pocket!

So what is excess? It’s a predetermined amount that you, the ensured has to pay before you can make an insurance claim. Usually your insurance company will quote you a hard figure – like R4000 or a percentage of the claim, such as 5% of the claim.

Why do they charge an excess amount? It’s basically there to deter you from making small claims on your policy. Let’s pretend that you have recently scratched your wing mirror against the parking garage pillar – something that happens to the best of us. You take your car to a panel shop and they quote you R1500 cash for a fill and re-spray. But “wait” you say, “I’m insured!” and whilst it’s true – you will find that your insurance excess is set at R4000, which means you would have to pay R4000 excess and your insurance company will pick up the tab. Unless you like giving money away, you would be crazy to make a claim! Just pay for it yourself and move on… Your insurance company doesn’t need the extra administration of dealing with tiny little claims and you keep your no-claims status (or cash back bonus). This is good for you as it means in a few years time, barring any claim being make by you, you can request a lower premium as you have not cost your insurance company anything. Yay!

What does excess cost? It really does depend on your risk profile and type of insurance taken and as such most people will find that the excess amounts are a bit different. Let’s look at a few examples of the excess stipulated on a policy where the car has a Basic Excess of R3,960.

The Following Additional insurance Excess fee Will Be Payable If:

R2,200 – The driver only has a learners licence.
R2,200 – The driver has had a licence for less than 2 years.
R9,900 – The car is used outside of South African borders.
R4,650 – The driver is not the regular driver and is under the age of 25.
R3,610 – The driver is not the regular driver and is over the age of 25.
R1,900 – The regular driver is under the age of 25.

R750 – The windscreen is damaged.
R850 – The radio is stolen or damaged.

Now it’s important to read and UNDERSTAND this CORRECTLY. The list above is Basic Excess + Additioanal Excess based on the Conditions.

Therefore, if I’m driving my car in Namibia and I have an accident, my excess is R3960 (Basic) + R9,900 (Outside SA) = R13,860 Gulp.

It gets worse!

If a young friend who is under 25 is driving my car in Namibia and he/she has an accident, my excess is R3960 (Basic) + R9,900 (Outside SA) + R4,650 (Non Regular under 25yrs) = R18,510.

It’s therefore vital that you understand the risks when letting someone else use your car and if you are travelling long distance and sharing the driving responsibility, then be sure to add the necessary people to your policy. It doesn’t cost you anything to do but there are limits to the number of additional drivers your can add.

Smaller claims such as Windscreen replacement and Radio theft are usually quoted excluding the basic – but be sure to check yours specifically.

Further Reading:
http://mg.co.za/article/2011-06-01-what-you-need-to-know-about-insurance-claims-and-excess

http://www.osti.co.za/excess.html

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