If you are a current or future car insurance policy holder, you will need to know the ins and outs of what is covered and how your policy works.
One of the main concerns that people have is how much they have to pay in the case of a claim or how much their excess will be?
What is excess?
You may be shocked when you find out that you have to “have to pay in before I can get something out”. That is called excess.
For example, if your car is insured against accidental damage and you are in a minor accident that requires repairs costing R20 000. To get the car fixed you will have to pay whatever the excess amount is – usually between R2 500 and R10 000 in the SA market – and the insurer will cover the rest.
You may want to change insurers, however that is not the solution. Most insurance providers have a compulsory excess but it’s up to you to increase or decrease this amount according to what is affordable for you.
Remember, if you choose to pay a higher excess you will pay a lower monthly premium and if you choose to pay a lower excess you will pay a higher monthly premium.
You might be tempted to choose the higher excess for the lower monthly but when you suddenly need to pay a R10 000 excess to get your car repaired, you may find yourself in a financial tough spot.
Therefore, it is important to assess what excess amount you will be able pay for an unexpected claim. Have an emergency fund in a savings account that you can access when life throws you a curveball.
How you can lower your monthly premium?
With rising costs on the mind of many consumers, there is a constant need to save money.
There are also many ways to reduce your monthly premium including:
– driving better on the road
– having a tracking device fitted on your car
– parking in a locked garage
Speak with your insurance provider to find out about other ways you can reduce your car insurance premiums.
Do you have have comprehensive insurance?
If your premium is super low, this could indicate a very high excess or you are not comprehensively insured.
For example, certain insurance products limit the amount payable when your car gets damaged and only charge a percentage-based excess. Which means you have to pay, say, 10%, of the cost of the claim instead of a fixed known amount. So if your car is stolen or written off, and you’ll only be able to claim for 90% of its value.
Keletso Mpisane head of MiWay Blink said, “Comprehensive car insurance with a low excess is similar to the top tier medical plans that cover almost all the costs. You need to find the happy medium that works for you based on how much you can afford each month, and how much of your emergency fund you’ll have to pay in for the excess.”