What You Need to Know About Excess (Basic) - Part 1

Are you a first time car owner? Do you know what you need to pay in the event of an accident?

If you are a first time proud owner of a car, you will probably have seen the certificate of insurance from your insurer already. You might not have noticed in the certificate or might not even be aware of this term that appeared as Excess. Some people like to call it "Deductible" instead. So, what is it?

I'll like to define it as the minimum amount that you have to pay before the insurer proceed to settle your claim. Another definition is also available at thefreedictionary.

Let me give an illustration. For example, right under your certificate, the standard excess is stated as $500.00. Thus, in the event that you met a minor accident and need to submit your damaged vehicle for repair and assuming that the cost of repairs is $2000.00, your insurer will only pay $1500.00 ($2000.00 - $500.00) for the cost of repairs. The balance of $500.00 is the amount you have to bear.

So, what if the cost of repairs is lesser than the excess stated in my certificate? In such cases, there is no incentive for you to pursue a claim with your insurer anymore. You may consider settling the claim on your own with your preferred workshop in order not to affect the No claim discount on your policy.

Thus, if you are getting a new car soon and checking out on the rates, you may also wish to take a closer look at the excess imposed. Do not be surprised if it differs among insurers since it is tied to the premium.

Last, but not the least, if you are interested to know more about excess and how it relates to your premium, keep a lookout for it as I will talk more on this soon!