When you take out car insurance, your monthly premium is a
given. However, you may also need to pay an excess amount if you claim from
your policy.
But which factors may increase your excess, and how can you
bring it down? We answer these questions, and we also consider how you can
prepare for an excess lumpsum.
Tip: Excess or not, you should always insure
your vehicle.
These factors may raise your excess
According to Christelle Colman, insurance expert at Old Mutual
Insure, excess payments can be the proverbial minefield for policyholders, and
it’s why they urge people to read their policy schedules.
She says that insurance companies adopt different approaches but
some of the excesses that they have seen in the market include the following:
· Age excess for young drivers.
· Single vehicle accident during certain hours
i.e. after 11pm and before 4am.
· Additional theft excesses if the car is stolen
or hijacked.
· Additional excesses imposed by the insurer due
to an adverse claims record.
· Voluntary excesses taken by the policyholder
at inception of policy in order to reduce premium payments (this is often
forgotten about, only to be remembered at a time of loss).
These excesses are typically in addition to the standard motor
excess.
Should you raise your premium to reduce your excess?
Colman says that if your appetite to pay an excess amount is
low, you should ask your insurer for an excess-free quote. Most insurers will
offer an excess-free quote by charging a higher insurance premium
payment.
You can also enquire about excess waivers that often are on
offer for persons not gainfully employed over the age of 55.
According to Caron Whitfield, head of marketing and distribution
at the Apio Group, there should be no surprises at claim stage if you are with
a broker.
“When a policy is taken out, all applicable excesses are
discussed with the client so that there are no unwelcome surprises when it
comes to claiming,” says Whitfield.
“The option to waive excess is available with most insurers.
Basically, you pay a bit more each month to have an excess-free claim. Some
excesses may not be waived, for example, an additional theft excess if you do
not have a tracking device installed, and it was an insurer requirement,” says
Whitfield.
How to prepare for an excess
Whitfield believes that the first step to ensuring you’re
prepared for an excess is to align your insurance cover with your budget.
“Make sure that you can afford the excesses that will apply in
the event of a claim. It does make some financial sense to have an emergency
fund that can be used in these instances, or an emergency credit card,” says
Whitfield.
Colman says that to prepare for the worst, you should read your
policy document and fully understand the excess impact on a total loss
claim.
“It’s also wise to shop around each year for the best insurance
deals. Remember only looking at bottom-line premium savings can be a bad
decision in the long run, as the level of excess contributions and impact on
your disposable income should also be a major decision-making factor,” she
explains.
For any assistance and/or advice regarding
your vehicle excess please feel free to contact us www.esbrokers.co.za/contact-us
Article by Isabelle Coetzee, featured in Just
Money