Car Insurance Excess Explained | Compare Quotes

Understanding Car Insurance excess

How excess affects your Car Insurance premium

Excess refers to a fixed amount that you have to pay if you make a car insurance claim. If, for example, your basic excess is R3 000 and the damages to your vehicle amount to R40 000, you will have to pay the first R3 000 and your insurance provider will pay the balance of the claim, i.e., the R37 000.

Ever looked at an insurance quote and wondered, 'What’s with this excess thing?' Well, never fear, Hippo.co.za is here to demystify car insurance excess and show you how you can balance it with your premiums to make sure your ride stays protected without breaking the bank.

What is Car Insurance excess?

You’ve bought yourself a brand-spanking-new car. To keep it safe on the road and save yourself any financial headaches if anything goes wrong, you’ve decided to take out a car insurance policy.

Excess, whether it’s for your car insurance or other policies, is the amount of money that you agree to pay out of your own pocket when you make a claim. You need to give your insurer this amount before they'll pay out, or you’ll need to pay it before collecting your car when repairs are complete.

Car Insurance of excess

The share of the bill that you’re responsible for paying to repair or replace your car if it gets damaged, destroyed, or stolen. If one of these scenarios happens, the insurer will pay out, minus the excess due.

Excess and Car Insurance premiums

Excess and premiums are like a seesaw. When one goes up, the other goes down.

If you opt for a lower excess, your monthly premiums will likely be higher. Choosing a higher excess can lower your monthly premiums.

Different Types of Excess

There are a few types of excess that can apply when you claim from your car insurance policy.

Compulsory excess

This is the minimum amount that you’ll have to pay when you make a claim on your insurance policy. It’s set by your insurer.

Voluntary excess

When negotiating the terms of your insurance policy, you can choose to pay in more than the compulsory excess amount—this is called the voluntary excess. It can lower your monthly premiums.

Additional excess

This is an extra amount that you might have to pay depending on the circumstances around your claim, such as age or length of policy.

Why Do We Need Excess?

Excess serves several important purposes in the insurance world:

Discourages fraudulent and frivolous claims

Excess helps discourage fraudulent and frivolous claims by making policyholders contribute to the cost of a claim.

Reduces administrative costs for insurers

It reduces administrative costs for insurers by making smaller, unnecessary claims less likely.

Helps keep monthly premiums lower

It helps keep monthly premiums lower by reducing claim costs.

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Higher Excess vs Higher Premiums: Pros and Cons

Choosing between a higher excess and higher monthly premium depends on how much risk and upfront cost you are comfortable with.

Lower excess

Pro: Lower upfront costs when claiming.

Con: Higher costs over time with frequent claims.

Higher excess

Pro: Lower monthly premiums.

Con: Higher upfront costs when claiming.

Low-risk drivers

Pro: Great for low-risk drivers.

Con: Bigger financial burden when claiming.

How To Choose the Right Level of Car Insurance Excess

Factors to consider:

Finances

Balance between upfront cost and monthly payments.

Risk tolerance

How comfortable you are with higher one-time payments.

Claims history

How frequently you expect to claim.

Vehicle usage

How often your vehicle is on the road.

Tips for Managing Excess

Here are some tips to balance premiums and excess:

Practice safe driving

Practice safe driving to lower risk and potentially reduce excess.

Review your policy

Regularly review and adjust your insurance policy.

Compare quotes annually

Compare quotes annually to ensure you’re getting the best deal.

Understanding the balance between excess and premiums is crucial for financial peace of mind. Compare quotes online with Hippo.co.za to find the best car insurance policy that fits your needs and budget.

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Can I Learn More About Insurance Excess?

What is car insurance excess?

Excess is the amount you pay out of your own pocket when you claim from your car insurance. For example, if your repair bill is R15,000 and your excess is R3,000, the insurer pays R12,000, and you pay the rest.

Why do I have to pay an excess even if the accident wasn’t my fault?

In most cases, yes, you still have to pay the excess upfront. If your insurer can recover costs from the other party, you might get it refunded—but this process can take time and isn’t guaranteed.

How is excess calculated in South Africa?

Excess can be a fixed amount, a percentage of the claim, or both. For example, it could be R5,000 per claim, a percentage of the claim, or R3,000 plus 10% of the claim. It also depends on your insurance provider, vehicle type, driver age, and claim history.

Can I choose a higher or lower excess?

Yes, most insurers let you choose. Higher excess usually means a lower monthly premium, while lower excess usually means a higher monthly premium. Choose based on what you can afford in an emergency.

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