Variable Excess | Fixed Excess

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Variable Excess versus Fixed Excess

Wednesday, 26 August 2009 08:22

To prevent their clients from making claims on small amounts, insurance companies introduced excess amounts. This is the First Amount Payable by the insured to cover part of the damage or claim made to the insurer. It’s the risk you as the owner of the car insurance take on yourself.

This is a form of self-insurance. You are not paying the insurer a pro-rata fee to repudiate the claim, but merely covering part of the damage yourself. Excess applies even if you are not at fault. That is, if someone causes damage to your car you still pay an excess as insurance companies do not place blame as a criteria for insuring you.

Variable Excess
Excess where you pay different amounts depending on the type of claim is known as variable excess. For example, excess to cover a broken window may be R500 while accidental damage excess is R2000. This could work out to your advantage as you can still claim for smaller amounts. If your insurer uses variable excess, you will probably have to pay other excess amounts as well – such as if the driver of the vehicle is under 25.

Some insurers charge you a percentage of the claim. That is if you are claiming for a window to the value of R500 and your excess is 10% you pay R50. Which is great if you don’t write-off your R750,000 car and have to foot the R75,000 excess amount.

Fixed Excess
Fixed excess is a flat rate that no matter what the claim you pay that amount. This also has it benefits, in that you know exactly how much excess you will have to pay in any event. The downside is that this amount covers small claims which means you only claim from your insurer when the damage is greater than the excess amount. As a result of these small claims being covered by your fixed or fixed flat excess, insurers have offered rewards for no claims.

As a fixed amount, fixed excess can be increased or decreased according to your circumstances. The higher your fixed excess the less you pay monthly.

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