Did you know that car insurance excess is the most important thing you need to know when taking out a car insurance policy?

Why?

That’s because low car insurance premiums often mean high excess costs. 

Choosing a new car insurance plan isn’t easy, especially if you don’t know what you need to be looking out for.

Don’t get caught with insurance policies that seem to have low premiums but, behind the scenes, have a high excess that will bite you when you end up making a claim! 

Our expert car insurance team has done all the necessary research for you so that you can be equipped with the necessary, up-to-date information before selecting your next car insurance plan. 

What’s Car Insurance Excess?

Your car insurance excess is a fixed amount you agree to pay when you first take out your car insurance policy.

When you’re in an accident, your insurance provider demands that you first pay the agreed amount that they won’t cover (the excess), and then they’ll pay the rest, depending on what type of claim you make. 

Note that you are liable to pay your car insurance excess whether or not you are at fault. 

This is standard procedure for all car insurance policies, even though it might seem unfair. 

However, your insurance company can still try to claim the excess amount on your behalf if you are not at fault.

Why Should You Have Car Insurance Excess?

You should have car insurance excess because it helps you lower your monthly premium by agreeing to pay a certain amount of excess when you claim. 

However, car insurance excess isn’t completely voluntary and is somewhat demanded by your car insurance provider. 

This is because

Car insurance excess helps insurance companies avoid fraudulent insurance claims and continual minor claims.

It also avoids small-value claims that have a high administrative cost compared to the value of the claim. 

Compulsory Excess vs. Voluntary Excess

It’s important to know what the differences are between compulsory and voluntary excesses, as they influence the amount you have to pay every month. 

You don’t want to get caught by insurance companies just because you don’t know what these differences are. 

So, let’s take a closer look:

Compulsory Excess

Compulsory excess is the fixed amount added to your insurance policy by your insurance provider.¹ 

This amount varies and is determined by different risk factors you might have, e.g., your age, your experience in driving, or the type of car you’re driving. 

Voluntary Excess

Voluntary excess is the amount you volunteer as a client to pay when making a claim. 

Thus, you can decide whether or not you want to pay a large amount of excess when making a claim or a smaller amount. 

The amount you volunteer will determine the price of your monthly car insurance premium, as a higher voluntary excess will lower your monthly premium. 

How Car Insurance Excess Works

It’s essential that you understand how car insurance excess works. 

This will ensure that you make well informed decisions when choosing your car insurance and don’t get any surprises the day you want to make a claim. 

Let’s break it down for you:

If, for example, your basic excess is R3 000 and the damages to your car total R40 000, you must pay the first R3 000, and your insurance provider will pay the remaining R37 000.²

Another scenario is…

Your insurance policy excess is R20 000, and you get into an accident where you can claim R80 000. Your insurance will keep the R20 000 and pay the rest (R60 000) to you. 

Types of Excesses

There are 3 major types of excesses that you should know about, namely standard excess, young drivers’ excess, and imposed excess. 

These all affect your excess amounts and monthly premium. 

Let’s take a look at each of these types:

Standard Excess

The standard excess fee is the fee you agree on with your insurer that you’ll both pay when the claim is made.  

It’s the basic excess for the type of insurance you have. 

It can be used alone as a basic excess or combined with another excess.

Young Drivers’ Excess

This is an additional excess that’s required due to specific circumstances, like the driver's age or experience. 

Drivers under 25 must pay this excess if they file a claim. 

Excess fees that apply to drivers under the age of 25 include:

• Excessive inexperienced driving - This applies to drivers who are over the age of 25 but have fewer than 2 years of driving experience.
• Driver excess unlisted - This applies to drivers under the age of 25 who aren’t covered by this policy.

Imposed Excess

An insurer may impose a non-standard excess due to the number of claims you’ve had or other factors that may indicate you’re more likely to make a claim.

Can You Reclaim Your Excess?

Car insurance excess is demanded by all car insurance companies, which might make it seem unlikely that you'll be able to reclaim your excess amount. 

However, there’re 2 major ways in which you can try to reclaim your excess. 

This is how:

Having the Excess Waived

You can have your excess waived if you prove that you weren’t at fault and provide details of the person who was at fault (including their name and address) to your insurance provider. 

Your insurance provider can try to reclaim the excess on your behalf. 

However, your insurance provider isn’t legally required to do this for you. 

The exceptions are

• If your car’s parked and receives damage due to a flood or fire, you’re still liable to pay a basic excess and can’t have your excess waived.
• If you’re the only person involved  in an accident. (The pole jumped out of nowhere but the insurance cannot claim from the pole).
• If you didn’t obtain complete information about the person at fault.
• You didn’t report it to the police.
• The offender has no income or assets with which to pay.
• The legal fees associated with retrieving the money outweighs the surplus amount.
• The perpetrator cannot be identified.
• The grounds of the claim are too complicated to justify recovering the excess.

Insuring Against Paying Your Excess

You can purchase an excess insurance policy to protect yourself in the event of a claim. 

This works as additional insurance that requires an additional fee to cover your excess. 

Consider this

You must consider whether this is the best option for you. 

You should look at what the cost of the excess insurance policy is and what the cost of increasing your voluntary excess would be. 

It all depends on how much your excess amount is. 

When Do You Pay Your Excess?

Most insurance providers want you to pay the excess first when processing the claim, and then they’ll pay the rest. 

However 

Sometimes your excess is deducted from the entire repair bill at the end of the claiming process. 

Thus, the excess amount is the first sum you must pay when your claim is settled or paid out.

How Much Is Your Excess?

The cost of compulsory and voluntary excess differs and is dependent on different factors that will be particularly relevant to you as the client. 

It’s important that you familiarize yourself with the difference between the cost of compulsory and voluntary excess as well as the factors that you might be subject to within compulsory excess, as they all affect how much you will need to pay once you make a claim. 

Here they are:

Compulsory Excess Cost

Your compulsory excess is determined by your service provider based on a standard amount as well as your personal risk factors, like age or the number of years you have been driving. 

Make sure you know what your service provider is expecting you to pay as part of your compulsory excess. 

Voluntary Excess Cost

You determine how much your voluntary excess will be and how much you are willing to pay. 

Make sure you consider your budget and the amount of excess you’re able to pay.  

Should You Increase Your Voluntary Excess?

Yes, increasing your voluntary excess amount will lower your monthly premium and allow you to save money for the day you need to pay the excess. 

But, be careful

You should consider whether you can afford the higher excess payment if you need to make a claim. 

If your voluntary excess amount is too high, it’ll require you to pay a large sum of money. 

A good balance between an affordable premium and a voluntary excess is recommended. 

Can You Change Your Excess?

Whether or not you can change your excess depends on what type of excess it is.

It’s important to remember the difference in nature between compulsory and voluntary excesses, as it also determines whether or not you can change the relevant excess. 

Read on for the details:

Compulsory Excess

No, you can’t change your compulsory excess amount, as it’s determined by your service provider based on your risk profile. 

The name “compulsory” should remind you that it’s non-negotiable and mandatory. 

This is important:

Always make sure you understand everything in your insurance policy documentation and know what your mandatory excess amount is.

Voluntary Excess

Yes, you can change your voluntary excess as you determine what the voluntary excess amount is. 

The name “voluntary” tells you that it’s a free-will decision and should be a reminder to you that you can change the voluntary excess amount.  

If you agree to make your voluntary excess higher, then your insurance premium will be lower every month. 

However, if you make your voluntary excess lower, then your insurance premium will be higher every month. 

When the Repair Cost Is Less Than the Excess

When the repair cost is less than the excess amount, your insurance won’t make a payment when you claim. 

This is why there’s a car insurance excess, as it prevents people from making small claims that have high administrative costs. 

What to Do When You Can’t Afford to Pay the Excess

If you can’t afford the excess, your insurer may provide a payment plan, but they may also refuse to process your claim.

When you purchase insurance, always double-check the excess you're agreeing to pay.

Maintain a reasonable level of voluntary excess, but don't go overboard.

Misconceptions About Car Insurance Excess Payments

A misconception about vehicle insurance excess payments is that choosing to pay the excess implies that you admit guilt after an accident. 

The reality is

You must pay the excess, whether or not you’re guilty.

Your insurance company can try to recover the excess amount for you, but they aren’t obligated by law to do so. 

Common Questions

In Conclusion

Car insurance excess is the amount you agree to pay to your insurance provider if you make a claim. 

It’s made up of compulsory and voluntary excesses. 

The basis excess amount set by your insurance provider is your compulsory excess and the excess amount you volunteer to pay is your voluntary excess

Increasing your voluntary excess amount will decrease your monthly premium; however, you need to make sure that you’re able to pay that excess amount that you agreed upon. 

If you’re under the age of 25 or have less than 2 years of experience driving, then you’ll have additional excess fees added to your compulsory excess. 

Be sure to browse the rest of our site for other handy articles regarding car insurance.