What is excess?
This is an extra amount you are liable for before your insurer settles your claim. In South Africa, excess is used by insurers to deter clients from making minor claims and to transfer some of the risk for the loss on to the customer.
In the country, the average excess amount is R3500 and this amount is dependent on your age and other risk factors. Most insurance companies in South Africa opt for charging a flat excess.
In South Africa you have the option of choosing insurance with no excess. Choosing insurance with no excess or lower excess can mean having to pay higher premiums.
How car insurance with no excess works:
In South Africa, car insurance can be very expensive. According to the South African Insurance Association, about 65% of road users have no motor insurance. This means that the remaining 35% are left having to cover the costs of those who choose not to insure their cars.
Car insurance contracts set out how much the car insurance company will pay out in any given situation. Without car insurance, you would have to cover all costs of repairing or replacing your car in the event pf damage or theft.
Types of car use you can get cover for:
- Private use
- Professional use
- Business use
Excess free policies have been introduced into the industry as an attempt to overhaul the local insurance industry. Excess waivers on vehicles are available from most insurers at an additional premium.
An excess may be a percentage of the claim, but it may also depend on the value and type of vehicle. By choosing an excess free insurance option, you need to be able to afford it. It is usually expensive and the monthly premiums can be crippling.