What is Insurance excess?


In most car insurance companies, a client will often come across words and jargon he or she does not understand. One of these words is excess. What does this mean? Is it something I have to know? What is its use? First and foremost, an excess is a determined amount that is initially paid by the insured driver to the company in the event of a claim before the insurer will pay out the coverage. Now you are probably asking yourself, why would do I have to pay the insurance company to get my fault claim? To answer that question, let us define the types of excess.

There are 2 types of excess, Compulsory and voluntary. Compulsory excess is set by the insurer and is most often based on a certain age group or driving experience. If the driver is young and just got his driver’s license, he or she would definitely have compulsory excess. However, age is not the only determining factor in compulsory excess. Companies primarily look at driving experience. A teenage driver would definitely have little driving experience and receive an excess but a middle aged driver that just learned to drive will receive the same excess if not a higher one. 

Unlike compulsory excess, voluntary excess is determined and set by the client. Setting voluntary excess is normally used to help reduce the paying premium to gain cheaper car insurance. The higher the insured driver sets his the voluntary excess, the lower the company sets the premium. The voluntary excess is always added to the compulsory excess to create the total excess an insured driver would have to pay in the event of a claim that was the driver’s fault. The total excess can add up to a significant sum, so a driver has to ask himself if he can truly afford to set a high voluntary excess.

In the event of a traffic accident that wasn’t the driver’s fault, then normally the other party’s insurer will pay the driver’s excesses as well as his own. However, in cases wherein there is a dispute in regards to the insurance claim, or the other party is unobtainable or refuses to pay out, the driver may be required to pay his excesses before any repair work can be done to the vehicle. Most insurance companies have considerably fair excess rates but it is important to know what these excesses mean in order to know its advantages.