Compulsory vs Voluntary Excess Explained: Saving on Car Insurance in South Africa

Excess is the first amount payable by you, a policyholder, anytime you submit a claim with your insurance provider. So, what are compulsory excess and voluntary excess? 

Understanding the difference between these two is essential, as each plays an important role in how much you pay when making a claim.

TL;DR – Our version of “I’m not reading all that, *SparkNotes pls.”

Compulsory Excess: This is the fixed amount your insurer sets that you’ll need to pay out of pocket when you make a claim.

Voluntary Excess: You can increase your amount so your monthly premiums are lowered, because a higher voluntary excess means lower monthly premiums.

More Excess = Lower Premiums: While increasing your voluntary excess cuts down your monthly premiums, your excess will be higher, so budget for that.

Balance Carefully: If you choose a higher excess amount, make sure you set an amount that’s affordable when claims season arrives.

Pineapple Bonus: Adjust your voluntary excess anytime before a claim through our Pineapple app, WhatsApp, or over the phone.

What Is Compulsory Excess?

Excess is the initial amount of money that a policyholder must pay out-of-pocket for a claim before their insurance company covers the remaining cost of the loss. 

This makes compulsory excess pretty self-explanatory. Also known as basic excess, it is the non-negotiable portion of the claim that you, as the policyholder, are responsible for paying.

But why does it exist? There are two main reasons:

1. Excess motivates you to be more responsible, take better care of your car, and prevent small, petty claims.
2. Paying an excess helps keep premiums lower by having you, the policyholder, contribute to part of the loss.

Example of Compulsory Excess in Action 

Let’s break it down with numbers:

Say the wind decided to push your car into a tree (it happens), and the total cost to repair is R50,000. You and your insurer previously agreed on your compulsory (or basic) excess being R4,100. After you pay that, your insurer will be left with a bill of R45,900.

Let’s turn it into a simple equation:
R50,000 (claim) – R4,100 (excess) = R45,900 (repair/replacement fee). 

Makes sense, right? It’s basically a small contribution signalling to your insurer that you take responsibility for your car’s protection. 

Calculating Compulsory Excess Impact

In some cases, additional excesses can be added on top of your compulsory excess. 

When Additional Excess May Apply

• Driver age (usually under 25): Right now, ama’2000s commonly attract extra excess because they are still inexperienced on the road, making them a higher risk to insure.
• Time since policy inception (often the first 3-6 months): Claiming within 3 to 6 months of your policy’s inception date may lead to you paying an extra excess.

Now that compulsory excess has left the duel, it’s time to take a jab at voluntary excess, the other final boss. 

What is Voluntary Excess? 

Voluntary excess* is an amount added on top of your compulsory excess when you claim. Unlike compulsory excess, which is set by your insurer and is non-negotiable, voluntary excess is optional. And it comes with a benefit: lower monthly premiums.

*Please note that Pineapple doesn’t offer voluntary excess. 

So it’s a bit like Katniss Everdeen in the first The Hunger Games movie. In imminent danger (a claim), it offers itself as a volunteer to save the day.

Let’s quickly compare the different excess types (just in case confusion has entered the chat).

Pros and Cons of Higher Voluntary Excess

Now that we’ve spilled on voluntary excess’s impact on your monthly premiums, you’re probably contemplating hopping onto that bandwagon. But before you do, let’s unpack the upsides and downsides of higher voluntary excess. 

How Excess Affects Your Premium

Now, you’re probably asking yourself, “excess this, excess that, but how does it actually impact my premium?” 

The simplest way to understand the relationship is to imagine a seesaw: When excess goes up, premiums go down, and vice versa.

Low vs High Excess: Which Costs More in the Long Run?

This depends on you as an individual, but this is typically how it looks:

• If you hardly ever claim: Opting for a higher excess usually means paying significantly less in monthly premiums. Over several years, this could save you thousands (provided you don’t need to claim often). However, when you do claim, you’ll need to have that higher excess amount available.
  
  A higher excess also makes small claims like minor bumps, dents, scratches, and dings essentially pointless. Most of that damage will fall under the excess amount, which means you’ll have to pay for it yourself. For example, if your excess is R16 000 and your damage is R15 000, you wouldn’t be able to claim, and you’d have to cover it out of pocket. The real question is: would you be able to afford that?

• If you claim regularly: Opting for a lower excess means your monthly premiums will be higher. But the upside is that you won’t face a large out-of-pocket fee when you need to claim.
  
  With a lower excess, you could even claim for those smaller dings, dents, and scratches that would otherwise come out of your pocket. This option can provide more peace of mind if you know you’re more likely to claim.

How To Choose the Right Car Insurance Excess

Choosing an excess is like picking your running shoes: your choice depends on your lifestyle and budget. 

We could tell you how to choose the perfect excess and exactly how much you should pay, but we won’t. This is because we don’t know your financial situation, claims history and insurance needs. 

But what we can do is give you some guidelines on what South African drivers should consider when selecting an appropriate excess amount:

• Your finances: Decide whether it makes more financial sense to pay a higher upfront cost or make monthly payments.
  
• Claims history: Based on your risk profile, how frequently might you claim? This answer might help you determine how high you want your excess to be.
• How often do you drive?: How frequently you’re on the road means a higher risk because you’re more exposed to dangers like accidents. So, it can impact how likely you are to claim, so keep this in mind when deciding on your excess. 
• Your driving habits: We’d all love to believe we’re the best drivers out there, but if your wheel has touched the curb more times than you can count this week, you might be at a greater risk of claiming more. So keep that in mind too. 

Let’s take a look at some scenarios to put this into perspective for you:

• Student with part-time job: Unless you’re giving nepo baby, you’re not sitting on a pile of cash. A lower excess means you can afford to claim if disaster strikes, even if your premium is a bit higher.
  
• Young professional: You’ve got a steady job and a healthy savings account. A balanced excess keeps your premiums affordable without putting you at a huge risk.
  
• Low-claims driver with a clean driving history: If you haven’t claimed in years and are so responsible on the road that the squad considers you the resident chauffeur, you might consider a higher excess. However, you never know what could happen, so selecting a healthy medium could be a consideration.

But what happens if circumstances change and you jump from one scenario to another real quick? 

Worry not, because with Pineapple, you’re locked in on savings, not excess. You can adjust your excess anytime before a claim, but not during, giving you convenience and full control of your coin. 

Ready to see how much you could be saving? 

Get your free quote now; it only takes 90 seconds. 

But if you’re still on the fence, allow us to explain how Pineapple makes the excess journey an easy one. 

Why Pineapple Makes It Easy

Pineapple is all about giving you the freedom to choose your excess.

While the standard excess for our comprehensive car insurance is R6,200 (the perfect balance between competitive premiums and not paying too much out of pocket for claims), we’ve got a few other excess amounts. 

These are:

• R2,000

• R4,100

• R6,200

• R7,350

• R11,600

• R16,900 

So, with all these different amounts, is the insurance policy still the same? Yes. Same comprehensive car insurance, different excess. 

But what sets us apart from other insurance providers? See, traditional insurers often bury excess details in fine print or make it difficult to change them. 

We do things differently:

• You can change your excess anytime: You can change your excess at any point before a claim is logged but not during the processing of an actual claim.
  
  
• Multi-channel support for changing excess: Request an excess change by reaching out to us via the Pineapple app, our website, or WhatsApp.
  
  
• Same policy benefits, regardless of excess: We’re not in the business of bringing you watered-down cover. So, regardless of the excess amount you choose, you still get all our sweet benefits, such as 24/7 roadside and fuel assistance, emergency accommodation, and key replacement.
  
  

Ready to hop onto the Pineapple savings train? Click here to get your quote today. It only takes 90 seconds.

Answering your Frequently Asked Questions about Car Insurance Excess

We went straight to the expert for some inside intel about comprehensive car insurance excess in South Africa, and we’re spilling the tea. Here’s what Neo Nape, Pineapple’s Head of Sales, had to say:

1. Do I pay excess if someone hits me?
   Excess is the first amount payable when you claim, regardless of who’s at fault. But your insurance provider will try to recover the cost (of your excess) from the liable party’s insurer. If the other driver is uninsured, you can take them to court, or they can pay for the damages out of pocket.
   
   
2. Is it better to have a high or low excess?
   The choice of a low or high excess depends on your affordability. A lower excess (e.g. R4,100) means that at the claim stage, it’s easier for you to get those kinds of funds readily available, but it comes at a higher monthly premium. A higher excess (e.g., R16,900) means you’re paying a lower monthly premium. But, at the claim stage, you will be asked to pay that amount for your insurer to settle your claim.
   
   
3. Why is excess important?
   Excess is a shared responsibility between the client and the insurance provider; the insurer is there to restore you to the same financial position. But the insurer also needs to ensure that you take full responsibility for your insured items and are not grossly negligent with their care. An excess also ensures clients make responsible claims and prevents fraudulent activity.
   
   
4. Will I get my insurance excess back?
   You MIGHT get your excess back if it’s a multi-vehicle accident that wasn’t your fault. But, this would only be possible if the other party is identified and has an active insurance policy. If the third party’s insurer accepts liability, your insurer will typically recover the cost of your excess and refund you the amount.
   
   
5. What happens if the repair cost is less than my excess?
   If your repairs cost less than the excess, then claiming is typically a loss for you. You gain no financial benefit, and the loss could affect future premiums. Thankfully, you have the right not to submit a claim if you’d prefer to fix the damages yourself. But, your insurance provider is responsible for putting you back in the same financial position. They want to ensure you’re well taken care of and that you get the best service providers and panel beaters to assist with damage repairs. 

Ready to Take Control of Your Car Insurance Excess?

Do you have any unanswered questions? 

Feel free to reach out to our friendly team of experts via our app, on WhatsApp (060 012 3771), or request a call on the same line.

Or, if you’re trying to scroll here for a little while longer, pop into Pineapple’s car insurance frequently asked questions section. We’re sure to answer all your burning questions there. 

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.