Understanding insurance excess

By Staff Writer

Most people are likely to be involved in a car accident at some point in their lives, particularly in South Africa, which has a very high accident rate. However, many consumers mistakenly believe that if they are involved in a no-fault accident then they will not be required to pay the excess on their insurance policy.

This is according to Delouise Marais, Regional Manager of MUA Insurance Acceptances Gauteng.

“Many consumers believe that if they are in an accident the guilty party will be required to pay the excess on both vehicles.

"However this is not the case as policyholders themselves are always, first and foremost, responsible for the excess payable in terms of their own policies.”

She says that once the insurer has recovered the money from the other party; however, they should reimburse the excess.

“It is important for anyone who is involved in a no-fault accident to track the status of the claim and make sure that their insurer refunds their excess and reinstates their bonus or no claims discount once the money has been successfully recovered from the other party’s insurance policy.

“This is one of the reasons why it is so important to establish compulsory third party insurance in South Africa. At the moment it is estimated that only 35% of the cars on the road are insured. If you are involved in an accident with one of these cars then not only will you have to pay the excess but it is also highly unlikely that you will recover the cost of the damages, which means you may lose your no claims discount.”

Marais also notes that there is more than one excess that can be levied on an insurance claim. “Most insurance companies charge a higher or additional excess if the driver is younger than a certain age, as a result of the high frequency of accidents in this age bracket or if the insured has a bad claims history.

She says that while these are common excesses that many people understand, there are additional excesses payable that few people are aware of. “Most policies may include a theft excess, which means that the consumer is responsible for paying an additional excess when their car is stolen or high-jacked.”

“Another important point for consumers to be aware of is the introduction of the time of accident excess. Nowadays, some insurers also charge a higher excess if an accident takes place at a certain time – say at night between 12 and 5 in the morning.”

Marais says one can elect to have a waiver on a policy whereby the basic excess is deleted, however this is likely to result in an increase in the premium paid. “It is also important to realise that this excess waiver is often only applicable to the basis excess and one might still find themselves responsible for any additional excess noted on the policy.”

“There are a number of different excesses that can be levied on an insurance policy and it is very important for consumers to read their policies carefully and take the time to speak to their brokers to establish exactly what excesses they may be liable for,” concludes Marais.

Recent Articles

Featured Your guide to debt counselling

The National Credit Regulator (NCR) reported more than 20 million consumers to be in debt in 2018 and 40% of them were behind with their payments. Due to the economic conditions in the country, many consumers find themselves incurring too much debt that they cannot repay.

Read more

Should you take a sabbatical this year?

In South Africa, sabbaticals are not as common among the general workforce – but they have become popular among executives and CEO’s. Justmoney finds out what a sabbatical is, how to convince your employer to let you take one, and how to manage your finances before and while you’re away.

Read more

A photographer’s journey into entrepreneurship

This week Justmoney chatted to this 25-year-old to understand what makes her tick, what her thoughts on money management are, and the financial advice she has for other young entrepreneurs.

Read more

Travel insurance through medical aid: Is it enough?

Having travel insurance as an added benefit with your medical aid is common practise, but what does it cover and is it enough?

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Steers Varsity Cup Monday Madness

Price: R59
When: Mondays
Where: Kimberly

Old Mutual Actuarial Bursary

Price: R0
When: 26 March - 30 May
Where: Nationwide

Tsogo SunBreaks Vacay Special

Price: R1,115 per room
When: 15 -31 March
Where: Gauteng, Cape Town, and Durban