Understand your insurance excess

Many motorists first truly pay attention to their insurance policy when they need to submit a claim after an accident. One of the most common areas of confusion is the excess – the portion of the claim you must pay.

Juan Hanekom, the national director of the South African Motor Body Repairers’ Association (Sambra), an association of the Retail Motor Industry Organisation (RMI), says the association regularly receives queries from customers uncertain about how their excesses work. Sambra represents almost 1 000 motor body repair businesses across SA and accounts for most of all insured repair claims in the country.

Hanekom says, “The primary purpose of an excess is to discourage small and unnecessary claims. It ensures that insurance is used for significant, unaffordable losses rather than minor repairs, keeping premiums more affordable for everyone,” he says.

Excesses vary depending on your policy:
• Standard/basic excess: The insurer’s standard excess for your type of insurance;
• Voluntary excess: An additional amount you agree to pay in exchange for lower monthly premiums;
• Additional excess: Applied if you are deemed high-risk, such as being under 25 or having a licence for less than two years;
• Imposed excess: Applied due to your claim history or other risk factors.

Hanekom says some motorists also consider an “excess protector” policy, which covers the agreed excess in the event of a claim.

“It’s important that insurers clearly explain these options at the outset and when changes occur, so that policyholders know exactly what to expect.”

Another key question is who recovers the excess when another party caused the accident. Hanekom says insurers might try to recover it from the other driver’s insurer, but there is no obligation to do so.

“If your insurer doesn’t pursue recovery, you are entitled to do so yourself with their permission. Many motorists don’t realise this, but it can make the difference between losing or recouping that excess amount,” he says.

If you are unhappy with your excess?
It is advisable to pay it upfront to avoid delays in repairs or incurring additional costs, and then take up the dispute with your insurer.

The National Financial Ombud (NFO) advises that if you are considering a voluntary excess to reduce premiums, be sure to:
• understand the compulsory and voluntary excesses in your policy;
• understand exactly how much bolded in rands or percentage you are liable to pay at claim time;
• review exclusions carefully. They are often behind disputed claims;
• compare insurers on offerings like excess waiver options or other protective add-ons.

Hanekom says if your claim has been reduced or rejected due to excess or related policy terms and you feel it wasn’t properly disclosed or fair, you can approach the National Financial Ombud Scheme, but note that clear communication at the point of sale is key.

“Understanding your excess puts you in a far stronger position when an accident happens. Take the time to discuss your options with your insurer and choose a balance that works for your financial situation. Being informed is the best protection you can have,” Hanekom concludes.

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