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Understanding Insurance: What is an Excess?

Most insurance policies include an excess. This is the amount you’re expected to pay should you make a claim on your policy. It’s a way of you accepting a small portion of the risk yourself. The amount of the excess should always be specified in your policy.

How does it work? If your car is damaged in an accident, the cost of repairing the damage might be R40 000. If you have a  R5 000 excess, you’d pay the first R5 000 of the claim and your insurer would pay the rest.

When paying an excess, it’s irrelevant who was to blame for the accident, but it is possible to claim your excess amount back from a guilty party. Most Insurance Companies have a legal recoveries department that will do their best to recover your excess free of charge. Unfortunately, this can take a long time – especially if the guilty party isn’t insured.

Other examples of when an excess may not be recovered:

• You the insured do not have the guilty party’s details
• The guilty party does not have any income or assets to attach
• The legal costs outweigh the recovery costs (excess amount)
• The guilty party cannot be traced
• The merits of the claim do not justify the recovery of the excess

An excess serves to deter customers from submitting minor and/or fraudulent claims which keeps premiums at an affordable rate and allows customers to keep their No Claim Bonus.

Not every policy has the same kind and level of excess and excesses don’t all apply in the same situations. Your insurer may have different types of excesses, and some policies may have more than one applicable excess so it’s important to know how much your excesses are and when they apply.

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