February 25, 2023
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
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
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
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
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
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
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
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
PMD’s comprehensive car insurance provides the customer with fixed premiums and a reduce-to-zero excess – meaning the basic excess amount reduces to zero over time. Reduce-to-zero excess also applies to customised total-loss car insurance. Different excesses will apply when other drivers use your car. Excesses also vary regarding tyre and glass claims. When an accident is not your fault, the insurer may repay your excess if they manage to recover total damages from the other party who caused the accident. With PMD, repair work on your damaged car will only start after paying the excess.4
The above article is designed to provide general information to assist you in understanding the various characteristics of car insurance.1,2,3,4
Should you need a quote or would like to buy affordable car insurance for your car, simply contact us at PMD. We provide affordable, with fixed premiums* and reducing excess*. Learn more about PMD’s uniquely designed products and world-class client experience. Our comprehensive car insurance and customised car insurance plans cover cars up to 15 years of age, but our third-party PLUS car insurance covers vehicles of any age. T’s and C’s apply.
Concerning all financial services products, first obtain professional advice from a certified financial advisor to make sure the product suits you.
November 7, 2023
November 7, 2023