Insurance Excess Explained In Great Detail

Most policyholders find it difficult to understand what an insurance excess is.

They do not know why they should pay this and particularly how to get their hands on this money in the event that they were not to blame for the accident bringing about the insurance claim.

In this article you will get some advice and clarity on how to proceed as soon as you made an excess insurance policy payment.

An excess is the first sum payable by you in case of a loss and is the uninsured part of your loss, so when you submit a claim, you will need to pay an excess.

It often should be paid to the garage repairing your car as soon as it is fixed before you can drive it away.

In case you have to pay an excess for damages caused by a car accident, it is of no importance who was held responsible for the incident, this works to prevent clients from submitting fraudulent claims or minor claims, and helping to keep premiums down.

An insurance excess is a consented amount of cash that you the customer is legally responsible for paying in case of a car insurance claim being settled.

So how exactly does it work? If your car is involved in an accident, the expense of fixing the damage may be $2000.

If you had a $400 excess, you would pay the first $400 and the insurance provider would settle the remainder.

Insurance Excess

Pros:

  • Subject to fairly less rate and form regulation compared to primary insurance.
  • Insured has a direct contractual relationship with the excess insurer.
  • Permits insured to manage smaller more regular claims.
  • Cash flow is improved.

Cons:

  • Where a self-insured retention, insured has to give claims handling.
  • Pricing of excess policy might be hard.
  • Excess carrier might cause claims handling redundancy.
  • Needs coordination of claims activities

What are the various kinds of excess?

Almost all policies feature two kinds of excess insurance policy, voluntary and compulsory.

What is voluntary excess?

It is added to the compulsory excess; these figures together are the amount you should pay if you make a claim.

However, as the name implies, you may decide on how much voluntary excess you intend to pay.

You can bring your premium down by increasing your voluntary excess; however, remember that you will be required to pay this out if you make a claim.

Higher excess, lower premium or lower excess, higher premium? You choose since you are in charge.

Compulsory excess

A compulsory excess is not negotiable and is set by the insurer.

It’s the least amount your insurance provider anticipates you to pay towards personal accident claims or car repairs.

This excess differs from one individual to another and is determined by:

  • Your age
  • Any driving convictions and previous insurance history
  • The kind of car you drive
  • Your driving experience

Insurance providers impose a compulsory excess to prevent motorists claiming for every small scratch and dent.

Assuming there was no minimum amount to pay, there could be a lot more claims and insurance premiums could increase sharply.

By imposing a minimum compulsory payment, insurers ensure they only deal with the more serious and expensive claims, for which vehicle insurance is really intended.

How does car excess insurance work?

car excess insurance

Any time you claim on your car insurance you still have to pay towards the damage also, this is known as your excess. Below is all you need to know regarding car insurance excess.

  • It’s the amount the cash you need to pay when you make a car insurance claim.
  • You simply have to pay the excess if you are to be held responsible for any damage caused and your insurance company is paying for the car repairs.
  • These two amounts are usually merged into one excess amount once you get a quote, but not always so look at the policy carefully.

Things to consider with regards to your car excess insurance:

In case of an accident, think of the difference between the amount of your claim and your basic excess.

Always consider the impact a claim might have on your No Claim Bonus entitlement along with the impact on premiums in future years.

It might be worth increasing your excess to make savings on your insurance premium.

However, before you do, think of the car you drive and what might occur in case of a claim.

For example, if you drive an old, cheap car it might not be advisable to increase your excess.

After all, you do not intend to pay out more than your car is worth.

What is car hire excess insurance?

If you are planning to hire a car for the first time or have done so before, you are almost certain to encounter references to car hire excess insurance.

Best car hire excess insurance compensates you against the cost of this excess or deductible just by reimbursing the amount you might have had to pay to the rental firm in case of damage or loss to the hired car.

Car hire excess cover, therefore, has the advantage of you avoiding the heavy cost of the excess and reassurance in the knowledge that the excess is securely covered.

Annual car hire excess insurance will not only likely be relatively inexpensive but also offers the peace of mind and comfort of you being protected whenever you decide to travel.

car hire excess insurance

The advantages of car rental excess insurance

Reassurance

Renting a car can be an extremely frustrating experience, particularly if you are not familiar with it.

Not only are you confronted with driving a vehicle that is not familiar to you, but you are usually tasked with navigating unfamiliar territory and foreign road systems.

Buying a car hire excess cover will help you to eliminate some of these concerns and allow you to focus on the work in hand.

With car rental excess insurance, you can get rid of your excess liability in case of an accident. This is a worthwhile benefit to any customer.

Economical

Buying best car hire excess insurance through an independent service provider rather than at the rental desk can prove to be extremely affordable for businesses and people alike.

If you want to rent a car for a longer time frame, you can even find more savings to be made by buying an annual policy.

Some annual policies will give you a few months of constant cover.

This is ideal for business people or people who spend a lot of time overseas.

Better cover

The insurance cover that you can get from an independent service provider usually has better benefits compared to the cover you are given at the rental desk.

There are extra benefits to be like undercarriage, roof, tyres, keys, and windows.

The claims process may also be a lot more uncomplicated since the claims firm is based in your home country and not the country where you are renting your car.

Flexibility

Van hire excess insurance is created to benefit the needs of all clients whether they are business clients, foreign, domestic, regular users, etc.

The majority of car hire excess policies will give you cover for a couple of months of constant cover on a yearly policy and on a single trip/daily policy.

You should ensure that you take out the car hire excess insurance before signing the rental agreement since this cannot be removed once the signing of the rental agreement is done.

Additional drivers

If you are intending on taking a trip away with friends or family, you can include their names on at no extra charge.

This implies that you can share the driving and gain from some down time yourself.

Road rage

Some car hire excess cover will give you cover for any physical injury caused by a road rage incident.

Vital replacement cover

Businesses usually provide car rental excess insurance in case you lose the key to a rental car and incur fees for new locks.

This usually consists of locksmith charges as well.

This is an excellent advantage and eliminates the concern of losing your keys.

Car Jacking

Car Jacking Insurance

Some best car hire excess insurance will give you cover for car-jacking.

What is excess waiver insurance?

Excess waiver insurance for car hire is compensation insurance, which means that, if a policyholder is charged by a vehicle hire firm for the excess payable when their hire vehicle is damaged or stolen, they can ask for compensation from the car hire insurance provider.

It offers important reassurance for car hirers.

It also covers other parts of the vehicle that are not usually covered at all by hire businesses; whether or not the hire companies ‘Super Cover’ ‘Super CDW’ (Collision Damage Waiver) is taken.

Such parts consist of the underbody and roof, tyres and wheel, and glass (which include mirrors, windows, and lights of the car.

A last but key point to make is that these insurance policies cover the driver(s) instead of the vehicle, so are completely disconnected from the hired car.

This implies that in contrast to some remarks made at the rental desk they cannot ‘be refused’ since they do not have anything to do with the vehicle whatsoever!

Collision damage waiver insurance is a kind of protection utilized in a rented car.

Collision damage waiver restricts the amount of money a car rental business can claim from you for fixing particular areas of the hired car in the event that they get damaged while you have it.

What is covered by collision damage waiver insurance?

Every rental car business has its own specific version; however, collision damage waiver often covers the car’s engine and bodywork.

collision damage waiver

Collision damage waiver insurance doesn’t often cover:

  • towing charges
  • undercarriage
  • lost keys
  • flat battery
  • tyres and wheels
  • personal possessions
  • additional equipment, like ski racks, GPS or child seats
  • the interior of the vehicle
  • mirrors and windows

Renters that buy a collision damage waiver insurance pay an extra everyday charge on top of the hired car fee.

The CDW offers a level of protection for the renter that will cover damage to the hired car.

If the vehicle is damaged, then the renter is not to blame for some or all repairs, along with any loss of use fees which might accumulate while the hired car is being fixed.

Collision damage waivers are usually provided by car rental businesses in some instances during the rental process.

Renters are usually given a Collision Damage Waiver when they reserve the car, and also during the process of collecting the hired car.

Generally, the renter should specifically show that they are declining the optional coverage.

Credit card providers might give Collision damage waivers for cardholders that rent a car using their credit card.

Based on the credit card policy’s terms and conditions, CDW provided by the firm might be considered along with or supplemental to any other insurance that the renter might have, like a regular automobile insurance coverage.

Insurance demands that have to be fulfilled by car renters differ by country and state.

Occasionally, the renter can turn down Collision Damage Waiver coverage while not being required to give proof of other insurance, like with an automobile insurance policy or from a credit card.

In other instances, the renter might be required to buy the collision damage waiver insurance if they cannot prove an alternative kind of insurance plan.

Conclusion:

Your vehicle insurance is uniquely tailored to the needs you have.

For this reason, ensure you read your Product Disclosure Statement to get a grasp of how your excess works.

That is where the excess comes in, by making you pay a specific portion of a claim in advance, an excess protects the bigger fund.

In the event you lose a side mirror in a parking lot and your insurance excess is more than the expense of replacing the mirror, it will make no sense for you to claim for the mirror since you will pay for it anyway.

And keep in mind, this is a reasonable expense for you, so you technically do not need the protection plan.

So having an insurance excess is actually a protection to make sure that there will be funds on hand when you want to claim for higher amounts.