InsuranceAdvertiser DisclosureWhat Type of Excess Affects Your Car Insurance Premium?How Does Excess Affect Your Car Insurance Premium?Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s Last Updated: 15 May 2025 Fact Checked Our team recently fact checked this article for accuracy. However, things do change, so please do your own research. Writer Katherine Read Written by Katherine Read Financial Writer Katherine Read Is a Financial Writer Known for Her Work on Financial Planning and Retirement Finance, Covering Equity Release, Lifetime Mortgages, Home Reversion Plans, Retirement Planning, SIPPs, Pension Drawdown, and Interest Only Mortgages. Editor Bert Hofhuis Edited by Bert Hofhuis Entrepreneur & Founder Bert Hofhuis Is a Founder & Entrepreneur Simplifying the Complexities of Later Life Planning. He Navigates the Intricacies of Equity Release, Lifetime Mortgages, Reverse Mortgages, and Wealth Management With Clarity and Expertise. Reviewer John Duckett Reviewed By: John Duckett Reviewed by John Duckett John helps individuals get the best deal on car insurance. He advises on how to match client needs with budget and successfully negotiates with insurance houses to exceed client expectations. Working in the online space is his passion, he loves to share his knowledge on insurance and keeps an updated blog. Contributors: John Duckett Author John Duckett John helps individuals get the best deal on car insurance. He advises on how to match client needs with budget and successfully negotiates with insurance houses to exceed client expectations. Working in the online space is his passion, he loves to share his knowledge on insurance and keeps an updated blog. Car Insurance Check Promise Expert Verified Do You Want to Know How Your Excess Affects Your Car Insurance Premium? Find Out What Type of Excess Affects Your Premium, if You Should Take a Higher Excess or Higher Premium, & What a Good Excess Amount Is. Keep Reading to Find Out… Who Offers the Lowest Rates in 2025? Request a FREE call back discover: Who offers the LOWEST rates available on the market. Who offers the HIGHEST release amount. If you qualify for equity release. BOOK A CALL Car insurance excess is the amount you agree to pay your insurance provider when you make a claim, regardless of who’s at fault. This amount is agreed upon between you and your insurance provider when you take out your car insurance policy. However, do you know HOW your car insurance excess affects your car insurance premium? Do you understand why your monthly premium is so high, or, in contrast, why it’s amazingly low? We discuss the following in this article: Our highly skilled team at CarInsuranceCheck has done all the research so that you don’t have to! Continue reading and find out how excess affects your car insurance premium so that you can make informed decisions and find the perfect balance that suits your wallet! What Type of Excess Affects Your Car Insurance Premium? There are 2 types of excess that affect your car insurance premium, namely compulsory excess and voluntary excess. Hence, in order to understand how excess affects your car insurance premium, you first need to understand that there are 2 main types of excess and that each type affects your premium in a different way. Let’s look at the 2 types of excess. Compulsory Excess Compulsory excess is the set amount of excess that’s determined by your insurance provider. The determined amount is based on a standard excess amount, with an additional excess depending on your age, the number of years you’ve been driving, and whether or not you’ve made many claims before.1 The compulsory excess affects your car insurance premium by determining certain risk factors that you’re liable for and thereby increasing the amount that you have to pay when making a claim. For example If you’re under the age of 25, your fixed amount of compulsory excess will be much higher than that of a 35 year old. Voluntary Excess Voluntary excess works a bit differently because it’s the amount that you, as the client, tell your service provider you want to pay when making a claim. Why would you want to voluntarily pay more money to your insurance provider when making a claim? Because the excess amount you volunteer to pay determines whether or not you have a high or low car insurance premium. In short It’s mainly the voluntary excess that affects your car insurance premium. Can I Change My Voluntary Excess? Yes, you can change your voluntary excess, as most insurers will let you raise your voluntary excess to lower your premium. Why? Because increasing your excess moves some risk from the insurer to you. The question is how much should you change your voluntary excess, and what would be the right amount? Keep reading, as this article will continue answering these questions. Does Increasing My Excess Reduce the Premium? Yes, increasing your voluntary excess reduces your car insurance premium as it removes pressure from your insurance company to pay out more when you make a claim. By increasing your voluntary excess, you tell your insurance provider that you’ll pay more, and they’ll have to pay less when you make a claim. Thus, as an exchange, your insurance provider will lower your monthly premium. Just be careful You don’t want to make your excess too high and find yourself unable to pay it. Should I Take a Higher Excess or a Higher Premium? It’s recommended to take a higher excess, which will lower your monthly premium amount. However Whenever you increase your excess amount, you should ask yourself if you’re able to make the excess payment when making a claim. You don’t want to increase your excess amount just so that you can have a low premium every month and find yourself not being able to pay the excess. Which will result in your insurance provider not paying out when you make a claim. Thus, choose a higher excess amount that you’re confident that you’ll be able to pay later, which will also lower your monthly premium. What’s a Good Excess Amount? A good excess amount is subjective and depends on each individual based on their income and what they are able to pay. A standard car excess would be R2 500 per claim, or 5% of the claim, or a mix of the 2. However, it would be good if you could aim for an excess of less than 10% of the insured value of your car.2 But don’t forget When looking for a new car insurance policy, you want to make sure that you choose an excess amount that you feel you can comfortably pay when the time comes. You don’t want to make your excess too high and put yourself in a situation where you can’t pay the excess. However, you also don’t want to be paying extremely high monthly car insurance premiums because you don’t want to pay any excesses. You want to find a good middle ground between a reasonable monthly premium and a realistic excess amount that you’re able to pay when the time comes. Common Questions What’s the Difference Between a Car Insurance Premium & a Car Insurance Policy? Your car insurance premium is the amount of money you pay to your insurance company on a regular basis in exchange for a policy. Car insurance premiums generally follow the same principles across carriers, but they may differ in terms of how frequently you pay them, how businesses calculate them, and how your premium changes over time. The insurance policy is a contract between the insurer and the policyholder that specifies the claims that the insurer must pay under the law. Is It Worth Having Excess Insurance? Yes, it could benefit you to have excess insurance, also known as excess protection insurance. If you decide to take the route of increasing your voluntary excess to lower your monthly premium, you might find yourself unable to pay the large amount of excess. Hence, having excess insurance will give you the peace of mind that your excess will be covered when making a claim. But wait You should, however, evaluate the expense of increasing your voluntary amount as well as the cost of extra protection insurance. It might be preferable to raise your voluntary excess and use the savings to cover your excess. It all depends on your situation and what you feel most comfortable with. Is There a Car Insurance Company With No Excess in South Africa? Yes, there are car insurance companies that offer a no-excess option to customers. It may appear appealing at first because you don’t have to pay a huge sum of money while claiming. A no-excess car insurance policy, on the other hand, is more expensive. It raises your monthly premiums greatly and may be tough to maintain if you’re on a limited budget. Fortunately, most car insurance companies include medium coverage. If the no-excess option is unaffordable, policyholders can choose a lesser excess for a slightly higher premium. What’s the Purpose of a Car Insurance Excess? The purpose of having an excess is 3-fold. The 3 main reasons why you have excess and why insurance companies enforce excess on car insurance are because: Excess payments are a useful approach for insurers to defend themselves against the epidemic of fraudulent claims, because a consumer is less likely to submit a bogus claim when he or she is required to pay an amount ahead. Policyholders are discouraged from filing minor, administratively costly claims. It assists insurance providers in lowering claim expenses, which contributes to cheaper premiums. Can You Pay off Insurance Excess? No, you can’t pay off your insurance excess, as most insurance companies won’t process the claim if you don’t first pay the entire excess amount. This is why it’s extremely important that you choose an excess amount that you know you’re able to pay when you want to make a claim. If you aren’t sure if you’re able to pay your excess amount, consider getting excess insurance if you aren’t able to save money from the lowered premium amount. In Conclusion Our CarInsuranceCheck team compiled all the research about how excess affects your car insurance premium, so we trust you’ve acquired all the knowledge you need. It’s important to remember that there are 2 main types of excess that affect your car insurance premium, namely compulsory excess and voluntary excess. It’s recommended that you take a higher voluntary excess so that you can decrease your monthly premium, but you have to make sure that you’re able to pay the excess amount when you want to make a claim. Ultimately, it depends on what you can afford - a high excess amount when the time comes or a high monthly premium. Feel free to reach out to us if you need any support on your car insurance journey. People Loved Reading These Articles Car Insurance Excess
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