Car Insurance Co-Payments and Excess Payments
Many people won’t have car insurance because of the car insurance excess that goes with it. Most insurers offer their customers the option of car insurance co-payments or excess in exchange for a premium reduction.
The idea behind car insurance co-payments and excesses is the same – you agree to pay a share of the cost of your vehicle repairs in return for lower premiums.
Many people don’t know what the excess is and when they do understand, they don’t know why they should pay it.
What the #@**! Is car insurance co-payments and Excess!
Your excess is a fixed sum of money that you’ve got to pay when you put in a claim. The excess baffles car owners, so it’s not surprising that the Ombudsman for Short-term Insurance receives many complaints about excesses on policies.
The truth is that as a car owner, your obligations go beyond just paying a monthly premium.
You are also liable for a portion of the costs in the event of a claim, known as an excess, or you can call it the ‘first amount payable.’
It’s important that You understand your Policy
As a policyholder, it would be wise to know the terms and conditions of your policy regarding the excess amounts you’ll be liable for when submitting a claim. You can either opt for a fixed excess amount or a percentage of the claim.
If the excess is a fixed R3 000, and you’re in an accident where the damage to your car is R50 000, you’ll pay the R3 000 and your insurer the rest.
Some insurers apply a claim threshold amount while others look at some claims you have made over a given period. You won’t be liable for an excess on your first claim, but for all other claims within a period.
The excess or car insurance co-payments is an Amount you Pay
There are those who believe that if they are in a car accident which isn’t their fault, they’ll be refunded their excess, but this isn’t the case. The Ombudsman for Short-term Insurance lets us know that the excess is an amount that you pay in any event.
Most insurance companies charge a higher excess if the insured has a bad claims history or if the driver is younger than a certain age. There are in fact many different excesses levied. You need to understand your policy and the excesses that may occur.
There are some conditions where you will be required to pay an excess on top of your basic excess –
- When the driver is younger than 25 years of age
- A stolen car
- You claim in the first six months of the policy
- No security or tracking device
As a Policyholder You’re ALWAYS responsible for the Excess
Don’t think that if you are in an accident, which is not your fault, that the person responsible is going to pay the excess on both vehicles. Policyholders are always responsible for the excess payable concerning their policies.
Some insurers pay you back a pro rata excess if you were in an accident that wasn’t your fault and some will refund you the full excess – it all depends on what your policy says.
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