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Car insurance tips: how to work out the excess & deductibles?

Its all Insurance

Posted on Wednesday, June 22, 2022

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If you want to insure a car, you know that you’ll need to browse your car insurance options before making a decision. You’ll also know that no matter what level of insurance you choose, you’ll have to make provision for an excess payment or a deductible. Selecting a high excess in exchange for lower monthly premiums is an understandably desirable option, however, unless you’re confident that you know precisely what your excess and deductibles are, you might end up paying more than anticipated for an unexpected vehicle repair. 


To make sure you don’t accept a car insurance quote that turns out not to serve your needs, Budget Insurance has put together a guide to working out our car insurance excess and deductibles. 

What’s a car insurance deductible?


In an ideal world, honest interaction between all businesses and their customers would be standard. Unfortunately, in reality, this doesn’t always happen. This means that car insurance providers have to put measures in place to ensure that customers are discouraged from making false claims. 


Your car insurance excess and deductibles are basically the same, except that excess refers to the amount you’ve agreed — in advance — to pay in the event of making a claim, whereas a deductible only comes into play in the event of an accident. 


How does car insurance excess work?



Your car insurance excess is determined when you initially take out a policy. The only time it might change is when you make a claim. By knowing exactly what excess you've agreed to, you can prepare yourself for a possible future claim without worrying about how much you can afford. For example, if you’ve selected comprehensive car insurance with an R4,000 excess and the damage your car has sustained costs R6,500, you will need to pay the R4,000 excess, while your insurer will pay the remaining R2,500.


The amount of excess you can expect to pay depends on your risk profile and what you are happy paying. Certain factors (such as being a new driver or having limited driving experience) can make you a higher risk statistically, increasing your excess. The car you drive, where you live, how you use your vehicle and the measures you've taken to prevent your car from being damaged or stolen can also impact this. For example, if you have a tracking device installed on your vehicle and park it in a locked garage behind a locked gate, you can expect your excess to be lower than a person who has no device and parks on the street.


You might also be offered what's known as a percentage excess. This is where you agree to pay a set percentage of the total cost of a claim. In most cases, you can expect to pay a flat excess or set amount in the event of an accident. In many cases, you can opt for a higher premium in exchange for a lower excess, and vice versa. However, you should be aware that the circumstances of your claim could result in a price hike to your premium.

Misconceptions about car insurance excess payments


A common myth concerning car insurance excess payments is that agreeing to pay an excess is an admission of guilt if you pay it when an accident takes place. The reality is that you will need to pay the excess for any claim you make, no matter who was or is at fault. If the accident was the fault of another driver, your insurer may try to recover the excess amount from them on your behalf. It's worth keeping in mind, however, that car insurance providers aren't legally obliged to do this and that a number of them might not offer this service.

How much excess on car insurance should I pay?


It helps to remember that there’s no right or wrong decision when it comes to paying an excess. It is essentially your personal preference. It might suit you to pay a reduced monthly premium and set aside money for a higher excess payment. Alternatively, you might prefer to pay more every month so that your excess payment is low enough to pay without any problem if needed.


It’s also important to remember that honesty is your best policy for car insurance, including your excess. Being dishonest about who usually drives your car and other things your car insurance provider asks you about can result in increased excess or your claim being refused altogether.



Where to find the best car insurance in South Africa?


If you want an honest chat about your options or any further clarification on excess and deductibles, talk to us


Budget Insurance can help you select the level of coverage that meets your needs — with an excess that’s easy on your wallet. Request a quote today and start the conversation.