Essential Information About Excess Car Insurance Payments

You finally bought the car you have saved so hard for and had just taken out the most suitable car insurance for your needs. However, what exactly are the steps to be taken if you have that dreaded motor accident. Does your car insurer cover all the damage, or are there additional costs involved?

An excess payment is the fixed contribution you must pay each time your car is repaired through your car insurance policy. Usually the payment is made directly to the accident repair garage when you collect your car. If your vehicle is declared to be written off, your insurance company will deduct the excess agreed on the policy from the settlement payment it makes to you.

If the accident was the other party’s fault, and this is accepted by the third party's insurer, you'll be able to reclaim your excess payment from the other driver's insurance company.

But what happens if the other driver is uninsured?

All motorists know that it's a legal requirement (under Section 143 of the 1988 Road Traffic Act) to have insurance for any damage they cause to third parties. But still many people drive without any insurance. An estimate of the incidence of uninsured driving in South Africa is hard to come by and, for the obvious reasons, those drivers involved in breaking the law have every reason to keep quiet about it.

Calculations from the Department of Transport suggest that in this country around 15% of vehicles are being driven without valid insurance. This group of people not only impose costs on honest motorists in the form of higher premiums, but their presence on our roads also represents a serious risk to other road users.

Consequently, uninsured driving is increasingly being regarded as a major social problem.

But driving without insurance is not a victimless crime. If you are in an accident with an uninsured driver which wasn't your fault, the repair costs will be paid for by the Motor Insurers' Bureau that's funded in its entirety by the industry, or by your insurance company. Therefore, if you're involved in an accident caused by an uninsured driver you'll eventually get you car repaired, but you'll still have to pay the excess costs involved and there'll be no one to reclaim your excess from.

What is a Compulsory Excess?

A compulsory excess is the minimum excess payment your insurer will accept on your insurance policy. Minimum excesses will vary according to your personal details, driving record and by your insurance company. Today the average excess is around R1000, but younger drivers could be faced with excesses of up to R5000 - whilst more mature, experienced drivers with a good driving record, could be offered an excess of just R500.

What is a Voluntary Excess?

In order to reduce your insurance premium, you may offer to pay a higher excess than the compulsory excess demanded by your insurance company. Your voluntary excess is the additional amount over and above the compulsory excess that you agree to pay in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by your insurer, your insurer is able to offer you a significantly lower premium.

The garage has repaired my car but it won't release the car too me until I pay the policy excess to them. Is this right?

Yes, that is normal practice. But make sure you inspect your car when you collect it. You must be completely satisfied that the repair is perfect. Then make sure you keep their receipt for your excess payment as you will need this if you're reclaiming against a third party's insurance. And just in case there's a dispute, it's a good idea to make sure the repair garage gives you a repair schedule. This will list all the repairs that were made to your car.

When you are in an car accident, and need to pay compulsory excess, it is always a good idea to pay an extra amount to reduce your future insurance premiums. Drive safe!