How does car insurance excess work in South Africa?

It’s vitally important that you understand how car insurance excess works in South Africa so that you’ll be able to choose an appropriate car insurance policy. This article explains what you need to know about car insurance excess.^1,2,3,4

How does excess work on an accident claim?

Car insurance excess is the first portion of your accident claim that you must pay before they begin repairs your car, or when you collect it. Insurance companies introduced the principle of excess to eliminate any fraudulent or small claims. Higher excess lowers premiums, and vice versa.^1,2,4

Compulsory excess

Excess is compulsory when the insurer stipulates the amount in an insurance policy. Compulsory excess amounts vary, depending on different age groups driving the vehicle and the kind of vehicle involved.^1,4

How does the compulsory excess amount vary?

Excess amounts are mostly higher for inexperienced and younger drivers, whilst they would be lower for experienced ones. Insurance is all about risk; the riskier a driver is, the higher the excess. That’s why excess amounts for high-performance and luxury cars are also high.¹

What is voluntary excess?

This differs from the compulsory excess, where you, as the policyholder, voluntarily add an extra amount to the compulsory excess to lower your monthly premium even more. The premium is lower because you, as the motorist, are absorbing some of the risk.¹

Beware of high excess amounts

You may enjoy paying lower premiums but having a high excess amount means you need to have, for example, R10,000 cash available at short notice. Otherwise, the panel beater won’t be able to repair or release your car.^1,2

Can you get an excess refund?

To get an excess refund, two options are available. The one is for the insurer to waive the excess, and the other is to buy insurance to cover the excess payment. Concerning waiving the excess, the customer must prove they were not at fault, and provide the name and address of the guilty party.¹

A write-off payout

Note that your excess on a car write-off could be 5% or more of any of the following three values used by insurers. The excess on these claims is usually deducted off of the total pay-out amount. The pay-out can be the retail, trade and market values. Retail value is a dealer’s selling price of a vehicle; trade value is a dealer’s purchase price of a car; and market value is midway between the retail and trade values.³

Prime’s excesses

Disclaimer

The above article is designed to provide general information to assist you in understanding the various characteristics of car insurance.^1,2,3,4

Concerning all financial services products, first obtain professional advice from a certified financial advisor to make sure the product suits you.

Sources:

1. 1. Here’s how car insurance excess works
   2. Motor Insurance
   3. Motor Insurance
   4. SAIA Consumer Education
   5. Prime Comprehensive Car Insurance