Understanding Car Insurance Excess

When you took out your insurance policy, regardless of whether it was Car Insurance, Home Insurance or Buildings Insurance, you would’ve been informed of your excess amount. Excess in a nutshell is the amount you have to pay in order to have required repairs, that are covered by your policy, done. It’s traditionally the first amount you’ll have to pay in the event of a loss and covers the uninsured portion of your loss. Often the garage repairing your vehicle will require you to pay this amount before you can drive your car away, after the repairs have been done. 

Excess needs to be paid regardless of who was responsible for the incident, and serves, amongst others, as a deterrent for individuals who constantly want to claim for minor repairs, but also to help curb fraud. Insurance fraud is an issue that insurance providers have taken a lot of time to oppose, and an excess is one of the methods. A higher excess amount can also help to drop your monthly repayments and vice versa, so when you get a quote, insist on knowing the excess (even though you should be told regardless) so that you are prepared to have that amount available should you need to claim. 

Why would you need to pay excess on your policy if the incident you were involved in wasn’t your fault? The first reason is that when you sign your Car Insurance policy, you agree to pay an excess for any claim you submit. Blame for an incident isn’t a criteria for car insurance companies with regards to recouping excess amounts, you can however take action to claim the excess amount back from the party responsible for the incident. 

There are also a few instances where an excess cannot be reclaimed or recovered, and those are:

1. You, as the insured party, don’t have the guilty party’s personal details - making a claim highly unlikely or perhaps even impossible. 
2. The guilty party doesn’t have an income or asset to make up the funds to pay for your excess.
3. When legal costs are substantially more than the recovery / excess costs.
4. You cannot trace or find the guilty party to recoup the funds from.
5. The merits of the claim might not justify the recovery of your excess. 

Most insurance providers have legal recovery departments to try and help you reclaim your excess free of charge. This process should happen as soon as your claim is submitted and should they successfully recover the amount, you will be refunded. 

As you can see, excess is a vital component to the insurance industry, and while agreeing to a higher excess could result in lower monthly premiums, it’s crucial to strike a balance between your excess amount and monthly premiums. Don’t settle on an excess that you can’t afford should you need to claim, simply to avoid higher monthly premiums. 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial or legal advice.