As a car owner, you are not always at fault when an accident happens. Fixing your car after an accident is expensive, so you should consider getting car insurance. You might be required to pay an excess as part of your claim after an accident, but this depends on the situation’s circumstances. In this article, we will talk about excess in car insurance, how it works, and other details you need to know to make the best decision regarding excess.
What is excess in car insurance?
Excess in car insurance is the sum of money you settle to contribute when you lodge a claim on your car insurance. The rest of the fee for repair or replacement will be covered by the insurer. It is typical for your premium to be reduced when you pay a higher excess.
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Purpose of excess in car insurance
Excess in car insurance aims to eliminate or reduce low-value claims that are not cost-effective to process. It encourages drivers to be more responsible and take better care of their vehicles to avoid petty lodging claims. An excess also helps keep insurance premiums low. An excess on a car insurance policy can reduce the risk for the insurer, and if there is no excess, car owners will lodge a claim for every little scratch, dent, or bump their vehicles suffer.
Types of excess in car insurance
Excesses are of different types, and you may be required to pay one or more excess when making an insurance claim, and there may be more than one depending on the circumstance surrounding the incident and claim.
The various types of insurance excess include the following:
- Driver history excess: This pertains to drivers involved in an at-fault incident whose driver’s license has been made invalid, suspended, restricted, or disqualified in the three years preceding the period of the incident.
- Standard excess involves paying out of pocket when making an at-fault claim.
- Age excess: This excess applies to younger drivers under 25, but when another person under 25 driving your car gets into an accident, you, the car owner, will be responsible for the age excess when making an insurance claim.
- Voluntary excess: You may pay voluntary excess in addition to another excess, possibly to reduce your monthly premium.
- Glass/windscreen excess: You may resolve to get a low windscreen/glass excess or a free replacement. However, this decision might lead to an increase in your monthly premiums.
- Inexperienced driver excess: This applies to less experienced drivers. Some factors are considered to determine if you will be required to pay an inexperienced driver excess.
How is an excess paid?
Payment of excess depends on the nature of your claim and the insurer. When you make an insurance claim, the insurance company will direct you on how the excess is paid. Whether it will be must be paid to the insurer, removed from any amount paid to you, or if it must be paid to the car repairer when you pick up your vehicle.
Paying for excess car insurance always depends on the circumstances behind the incident leading to your insurance claim. It’s good to constantly review your insurance policies, read your product disclosure statement (PDS) carefully to understand how excess works, and know when you must pay an excess or more (your basic excess and other added excesses). You can also compare car insurance policies as they are custom-made for your needs. Choosing a higher excess plan can keep your premium low, but notwithstanding, don’t push yourself too hard; ensure to choose an excess you can afford.