Car insurance excess

Car insurance excess can be a confusing concept for some policyholders to understand. Some struggle to understand why they must pay it, and may feel its just their insurance company finding another means to extort money out of their customers.

In this article, we’ll take a detailed look at what car insurance excess is, how it works and whether costs can be recovered on any excess you pay.

In This Guide:

Car insurance excess defined

An excess is the initial amount made payable by a driver in the event of a loss. It’s also the uninsured portion of your loss. This means that when you submit an insurance claim, you’ll be required to pay an excess. It is typically paid to the garage or mechanic responsible for repairing your vehicle before you can drive it again.

When you are required to pay an excess for any damages that have arisen from an accident, insurance companies deem it irrelevant as to who was responsible for the accident. The purpose of this is to deter customers from submitting claims for minor incidents or attempting to submit fraudulent claims. This ultimately helps to keep insurance premiums down.

Your excess is an agreed amount of money that you are liable to pay when an insurance claim has been settled. For example, if the excess on your vehicle is R3,000 and the damages have amounted to R50,000, your insurer will cover the remaining R47,000 after you have paid your excess to the party responsible for repairs.

Why should I pay an excess if I wasn’t at fault?

Insurers do not use blame as a criterion to determine whether you must pay an excess or not. While it might seem frustrating, it’s important to understand that the administrative costs of processing a car insurance claim don’t change dependent on which party is at fault. If the accident was not your fault, you will still be able to claim the excess amount back from the driver who was at fault. Unfortunately, this can be quite a lengthy process, particularly if the other driver is uninsured.

Car insurance excess: A brief example

The best way to demonstrate how car insurance excess works is to consider a hypothetical scenario. Let’s imagine that the owner of a stationary vehicle which is insured has been rear-ended by another driver who is not insured. The driver who rear-ended the stationary vehicle is at fault, but the owner of the rear-ended vehicle must now pay an excess to have his vehicle repaired.

The insured driver of the damaged car has the right to fully recover funds from the negligent driver. This recovery will include the excess that the insured driver must pay. The insurance company will process this as part of the full recovery claim, including any legal costs that arise as a result of the accident.

Are there any times when an excess cannot be recovered?

Unfortunately, the following circumstances can make it difficult or even impossible to recover an excess:

• The party who was not at fault fails to get the details of the guilty party.
• The guilty party has no income or assets.
• The legal costs of recovering the excess outweigh the amount to be recovered.
• The guilty party can no longer be traced/has disappeared.
• The merits of the claim are insufficient to justify the recovery of the excess.

I wasn’t at fault during an accident – will I be penalized with an increase in premiums?

Unfortunately, many insurers only see fit to justify restoring a no-claims bonus if they have been able to successfully make a full recovery of funds from the guilty party. Companies who pay no-claims bonuses might be reluctant to pay out because of the claim, regardless of which driver was at fault. It is important to understand that most insurance companies offer a “no claims” bonus, not a “no blame” bonus.

In short: if you have claimed on your policy after an accident that wasn’t your fault, you may very well find that you lose your no claims bonus.

How should my insurance company react in the aftermath of an accident that wasn’t my fault?

Most insurance companies have a dedicated legal recovery department. The sole purpose of this department is to work tirelessly to recover your excess as quickly as possible, and free of charge. A reputable insurer should initiate the recovery process for your excess from the guilty party, and you should be refunded as soon as the insurer has been successful in recovering your funds.

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