In car insurance, excess is a fairly simple concept: it’s the amount you must first pay when claiming from your insurance provider.
So, why does it get so many motorists so excessively riled up?
We imagine it has something to do with paying a portion of a car accident bill even if they weren’t responsible for causing the incident.
Excess is more than a frustrating fee – believe it or not, it actually has benefits!
But before we get into that, let’s explore the difference between compulsory and voluntary excess.
Content:
- What is Compulsory Excess in Car Insurance?
- Understanding Voluntary Excess
- How Excess Impacts Your Car Insurance Premium
- Choosing the Right Excess for Your Needs
- Still Have Questions About Excess?
What is Compulsory Excess in Car Insurance?
Compulsory excess, or basic excess (if you’re a Pineapple client), is a non-negotiable contribution you make towards a claim, regardless of who was at fault. Once you’ve settled this amount, your insurance steps in and takes care of the remaining balance that goes toward repairing or replacing your car.
For example, if your excess is R4,100 and you file a claim amounting to R50,000, you’ll first have to pay the R4,100 while your insurer handles the claim’s outstanding R45,900.
R50,000 (claim) – R4,100 (excess) = R45,900 (repair/replacement fee).
The key to choosing an excess is asking yourself, “Will I have this money readily available should disaster, or a drunk driver, strike?”
Your insurance excess should be an amount you’d be happy to pay for a surprise hassle, like an unexpected car maintenance bill.
Calculating Compulsory Excess Impact
In addition to your compulsory excess, some insurers may charge additional excesses over and above your excess amount, depending on the circumstances of the claim.
This is known as ‘additional excess’ and can apply when:
- The regular driver noted in the policy is younger than 25
- The driver at the time of the incident was not the regular driver noted in the policy
- You file a claim soon after the policy’s inception (e.g. within the first 6 months)
However, the specific cases where additional excess will apply depends on the insurance provider.
For interest’s sake, let's say your excess is R4,100 and you’re a 23-year-old driver who got a comprehensive car insurance policy with Pineapple.
In the unfortunate case that you need to submit a claim, you’ll have to pay the standard R4,100 plus an additional R6,200 because of the age clause stated in your policy documents.
That means the excess amount you’ll have to bring forward is R10,300.
Therefore, the benefit of an excess in this case is that it encourages motorists to be more responsible. Knowing you could pay a lot in out-of-pocket fees can make you think twice about engaging in reckless driving and other unsafe behaviours behind the wheel.
So, it’s crucial to read and familiarise yourself with your insurance policy documents; this will give you a better understanding of your excess and which scenarios may apply to you.
Understanding Voluntary Excess
Voluntary excess is a bit like Katniss Everdeen in the first The Hunger Games movie. In the face of imminent danger (a claim), it offers itself up as a volunteer in an effort to save the day.
Have no idea what I’m talking about? You’re missing out; it’s a great movie.
Anyway, voluntary excess is an additional amount you choose to pay on top of your compulsory excess amount in exchange for lower monthly premiums.
It differs from the previously mentioned additional excess in that it is a choice (it’s in the name, silly) rather than a strong suggestion/must.
Pros and Cons of Choosing a Higher Voluntary Excess
Pros of Choosing a Higher Voluntary Excess
- Lower monthly premiums.
- Flexibility (you get to choose based on your affordability).
- Discourages you from claiming unnecessarily.
Cons of Choosing a Higher Voluntary Excess
- A higher excess means you bear more financial responsibility in the event of a claim.
- If the claim is lower than your excess, you might be tempted to pay the cost yourself (making insurance redundant, in this case).
How Excess Impacts Your Car Insurance Premium
The relationship between car insurance premiums and excess is a seesaw; when one goes up, the other comes down.
Excess has a direct impact on premiums, which explains why choosing a higher excess can help make those monthly premium fees more affordable.
This is because the insurer takes on a larger portion of the risk. The catch, however, is that you’ll have to pay more for the privilege of affordable premiums.
However, if you’re not worried about the monthly cost and are more concerned about the cost should you need to file a claim, the same principle applies. You can choose to lower your excess, but this means slightly more expensive premiums.
Don’t you love a give-and-take partnership?
Choosing the Right Excess for Your Needs
This is the section where we give our generic and unsolicited ‘advice’ (we’re not actually authorised to do that, so consider it a friendly suggestion) about how to choose an excess that works for you.
Except, we won’t.
We don’t know your car insurance needs intimately enough to tell you what is and isn’t crucial in your car insurance journey.
What we can do is offer you guidelines on the things to consider.
Here are some practical tips for South African drivers wanting to select an appropriate excess amount:
- Reflect on your financial situation.
- Consider your risk profile.
- Shop around for quotes from different insurance providers.
Much of life’s choices centre around finances; car insurance is no different. Your financial situation will likely be the deciding factor in which policy you choose and what excess you settle on.
Carefully consider how much excess you’re able to afford at a moment’s notice comfortably.
Next, factors affecting your risk profile can help guide you on the excess amount that’s right for your circumstances.
Your age, how often you use/drive the car, and your claim’s history will affect your premiums. So, if you find that this price is entering territory that’s out of your comfort zone, you can opt for a higher excess to help curb the cost.
Lastly, try to get as many car insurance quotes as possible.
Although they offer the same price, the details of a car insurance policy differ depending on the insurer. So, by getting numerous quotes, you’re able to compare the different policies, their premium prices and their excess amounts.
You’ll soon discover that although they offer similar premiums, the crucial difference lies in their excesses.
Pineapple Can Help!
Pineapple’s policies give you the freedom to choose your excess.
The standard excess for our comprehensive car insurance is R6,200 which is enough to ensure you enjoy competitive premiums while accepting some of the liability.
However, we also have other excess amounts:
- R4,100
- {R6,200}
- R7,350
- R11,600
- R16,900
And for those of you wondering, the insurance policy is the same. Different excess, same fully comprehensive cover.
Whether you choose the cheapest excess of R4,100 or the priciest offering of R16,900, you’ll still enjoy our quality coverage.
Pineapple’s insurance protects your car against fire, theft, hijackings, accidental damage, third-party accidents, and weather damage (including hail). We also offer add-on benefits like car hire and shortfall cover.
Get a quote by clicking here; choose your excess and enjoy the sweetest deal in town.
Still Have Questions About Excess?
Surely not! This article was as comprehensive as they come… Just kidding, we love an inquisitive person almost as much as Pineapple’s CMO (Chief Marketing Officer)–for context, she REALLY loves a curious mind (not the book).
Answering your Frequently Asked Questions about Car Insurance Excess
We sat down with Pineapple’s Head of Sales, Neo Nape, and asked him a few burning questions about car insurance excess in South Africa.
Here’s what he had to say:
- Do I pay the excess if someone hits me?
So it goes both ways, right? If somebody hits me, for example, and they have insurance, they can claim from their insurer and that third-party benefit, so I don't have to pay any excess.
But if someone hits me and they don't have insurance, and I have insurance, I'm going to have to claim damages through my insurance, right? This means the normal excess will be applicable.
- Is it better to have a high or low excess?
So it's simply based on the client's affordability, right? And lower excess 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 premium. However, a higher excess usually means that you're getting a lower premium based on your affordability. But, come the claim stage, you will be asked to contribute or pay that particular excess for the claim to gain some traction or progress.
It's purely based on the client's affordability. However, something we have here at Pineapple is that the client is able to change their excess at any given time before any claim event takes place.
So, you are not locked in on your excess until a claim event happens. If your excess is lower and you pay a higher premium, you’re able to move the excess a little bit higher so that you can pay a lower premium at any given time. However, it shouldn't be a claim stage!
- Why is excess important?
Well, short-term insurance (STI), our industry, is a shared responsibility between the client and the insurer; the insurer is there to put you back in the same financial position. Should any claim happen, you don't suffer any loss.
However, the company also needs to ensure that you take full responsibility for your items so that you are not grossly negligent in taking care of them. Obviously, an accident is unforeseen, which is something that we’re able to entertain; however, an excess ensures that clients ‘claim responsibly’ and prevents frivolous claims.
That is why excess is put in place: so that we can assign some sort of responsibility back to the client so that they do not claim excessively. That's the importance of excess: to actually share the risk between the insurer and the client.
- Will I get my insurance excess back?
No, I think it ties in with the previous answer; it's a shared risk. So, insurance needs you to pay an excess so that we can proceed with your claim and take some responsibility on your side to put you back in the same financial position. You will not be able to get your excess back.
- What happens if the repair cost is less than my excess?
Cool. Well, it is the insurer's responsibility to put you back in a financial position, right? And we always encourage clients to submit their claims should any kind of covered event transpire.
The client does have a right not to submit a claim should the claim excess be lower than the damages incurred if they want to fix it themselves.
But we do not encourage that because we’re responsible for putting the client back in the same financial position. We want to ensure that they are well taken care of in all the items or assets that they're insuring with us. So, it's not advisable that they not claim.
However, a client has the right to claim if the repair cost is less than the excess amount.
Contact Pineapple's Friendly Team!
For any other remaining questions, reach out to our qualified and helpful team of experts via our app, on WhatsApp (060 012 3771), or request a call on the same line.
Or, have a look through at Pineapple's car insurance frequently asked questions!
Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.
Team Pineapple
Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.
Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.
*We say they’re the finest because we want them to keep writing for us!
