Excess Payments and Your Car Insurance
The term excess payment, as it relates to car insurance, refers to the amount you will pay before your insurance pays anything. When you configure your policy, you set the excess amounts in several key areas.
In insurance terms, excess payments mean the amount you pay first, in the event of a claim, before your insurance company makes any payments. This typically applies when you are at fault. If the other party is at fault, your claims should be covered completely. There are times when you will pay the excess to the garage making the repairs, and then reclaim it from the other party's insurance later. Be sure you keep good records in order to facilitate the recovery process later.
Generally, when it is your fault the garage is paid the excess by you and the insurance company pays the garage directly for the rest. The garage is not likely to release the car to you until the excess is covered. If the car is a total write-off, your insurance pays you the full amount of the market value of the car, less the excess amount as stated in our policy.
This is all well and good in cases where all parties are properly, legally and adequately insured. What happened when the other party is not insured at all, or is inadequately insured? Assuming you have uninsured motorists insurance coverage, you will be mostly covered, but you will still have to pay the excess. This is more common than you may think. Therefore, it is important to consider the excess when you buy your car insurance.
The higher your excess amount is, the lower will be your premium. Your insurance company may set higher excess amounts for certain higher risk category drivers, such as young drivers or drivers with historically bad records. This is called compulsory excess.
However, it is mostly up to you to you to decide on the appropriate balance between lower premiums and higher excess payments in the event of a claim. When you set the excess amount, it is called discretionary excess.
The excess amount that you pay first is a large factor in your premium rate. Very low excess levels will mean a much higher premium amount. Therefore, it is important to strike the proper balance between premium costs and the possibility of larger outlays in the event of an accident.
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