If you are wondering what is the meaning of excess in car insurance? In short, it is the share of expenses you have to pay in any of the insurance claims, while the rest is paid by your provider. This amount varies from provider to provider and differs from policy to policy. Experienced drivers are familiar with the concepts. If you’re a new driver who doesn’t know about insurance excess, what it means, and how it works, keep reading this post.
All types of car insurance come with excess. However, the excess amount of car insurance differs in policies. It is common for many people not to know exactly what this means. Learning about your insurance helps you save so much time and energy, and prevents you from picking policies that are not so suitable for you. When you are looking for an insurance policy, paying attention to excess car insurance would be helpful in the long run. Therefore, in this article, we are going to take a deep dive into how insurance excess works and the different types of it.
Frequently Answered Questions
1: Is it better to have high or low excess?
It is best to consider what you can afford in case of an incident. A higher excess usually saves you more money in the long run, but it is crucial to choose an excess you can afford when raising a claim.
2: How does excess work in insurance?
Your excess amount of car insurance determines whether or not you can raise a claim for those accidents.
3: What does excess mean in car insurance?
An insurance excess is the amount you have to pay when claiming your insurance.
4: What is damage excess in car insurance?
Damage excess or car insurance excess is the amount you agree to pay when raising a claim due to any damage. This is a pre-agreed amount and your insurer will cover up the rest.
5: Do you pay if the other driver isn’t insured?
No, you do not have to pay excess money if the other driver is not insured. Having car insurance is mandatory in the UAE, therefore driving around with no insurance has penalties. A driver with no insurance has to pay all the costs right out of their pocket.
6: Can you pay your excess in installments?
Yes. Some insurance providers allow you to pay your excess in installments. Checking their website and their policies helps you realize whether or not they have this option.
7: Does raising your excess make your car insurance cheaper?
Raising your insurance excess reduces your premiums, therefore, in the long run, you end up paying less. In addition, a high excess rate inadvertently reduces the number of claims you make each year, leading to more savings. It is recommended to raise your insurance excess if you have the opportunity.
How Does Car Insurance Excess Work?
No matter how many years you’ve spent on the road, getting involved in any sort of accident is inevitable from time to time, be it a minor dent or a major collision. As such an event, your excess amount of car insurance determines whether or not you can raise a claim for those accidents.
For instance, if your insurance policy’s excess is less than the repair costs (let’s say your excess is 500 AED and you had an accident that costs 1000 AED to repair your car) you pay your insurer the amount of your excess, and your insurer takes care of the rest.
However, if your excess is more than the probable repair costs, (for example you hit another car’s bumper and caused a small scratch) it is best to pay out of your pocket. At least that is the smarter financial decision. If you’re still wondering about motor insurance’s excess meaning, or what excess means in car insurance, stay with us! In this process, pay extra attention to factors that affect car insurance premiums since they have considerable influence on cost of car insurance.
What is the Purpose of Car Insurance Excess?
So far, we answered “What is the meaning of excess in car insurance” and “How does car insurance excess work”. Now, it’s time to explain the purpose of car insurance excess.
In case of experiencing a serious accident that causes major damage and injuries to your vehicle or someone else’s, an insurance excess saves you a significant amount of money.
In some serious cases, drivers ended up paying only one-fifth of the repair costs, since they had an insurance excess agreement. Plus, this method reduces the number of low-value claims and reduces the risk profile on your insurance history. Before finalizing your insurance purchase, it is important to learn how the excess works. also, we suggest to read about how does auto insurance deductible work as important related topic that can help you to reduces cost and choosing best insurance. This will lead to choosing a more affordable provider that offers you the right services.
Why Should You Have Car Insurance Excess?
One of the main reasons why you should get vehicle insurance excess is to reduce your overall spending. But what does paying excess insurance mean?
Getting a higher excess rate reduces your premiums, resulting in savings on your total insurance costs. Especially if you have a low-risk profile with little to no claims, this is even more beneficial. It means you use your coverage less often, leading to lower premiums in the long run.
Nonetheless, insurance excess protects you from the financial consequences of accidents, lawsuits, and successful claims. Also, it covers your funds in case your policies aren’t enough to meet them.
Now, you may be wondering, how probable is it to get a lawsuit. Well, it’s more likely than you think. Car accident injuries make up a big percentage of lawsuits filed against the average person. Another reason for excess agreements is for expensive medical emergencies resulting from car accidents.
Different Types of Car Excess
Not all cases require the same policies. Plus, the excess is not much related to the insurance policy and it’s not one of differences between comprehensive and Third Party Insurance policies. Depending on the driver you are and your current state in life, the excess amount of car insurance differs.
Learning about the difference between types of excess helps you realize which one applies to you. Also, this leads to choosing a more suitable policy for yourself. Compulsory and voluntary are the two main types of insurance excess. In some cases, you might need temporary car insurance while any issues with your main car or main coverage gets settled.
Let’s take a more careful look at excess in car insurance meaning and the elements they carry:
What is a compulsory excess?
Now that you found the proper answer to “What is the meaning of excess in car insurance?” It’s time to learn more about compulsory excess. Car insurance compulsory excess means the amount of money you should pay to your insurance provider towards a claim before the process begins. This depends on different factors such as age, your claim, your car, and your experience. Let’s take a look at these important factors:
Age
Also known as Young Driver excess, the age factor is important in calculating your excess. Any driver under the age of 25 is considered a young driver. In this case, an excess regarding your inexperience applies to your insurance policy. This is due to all the possible risks that come with age and little experience. This type of excess also applies to new drivers. After the said age, this excess expires and no longer applies to you. Also having a 2-year experiment in driving reduces this excess.
Car type
More valuable cars, including luxury brands, vintage cars, or antique vehicles usually have a higher excess, since the smallest damage to these cars costs a lot. Understandably, these cars can get a much higher excess. The age of the car also matters. You might be able to get a higher excess in case you have a car that has a more powerful engine, fewer safety options, and expensive features that are harder to get your hands on.
Your claims
The type of claim you make affects your excess. Minor claims usually get lower excess, and vice versa.
License history and experience
Your experience as a driver is also very important. Having fewer claims also affects your insurance excess.
Unreliable repairs
If a certain unreliable or non-approved mechanic fixes your vehicle, you might end up having to pay a higher excess. Of course, you are the one who chooses where you want to fix your car, but in case it is not an approved garage, your insurer will charge more for excess since they believe it takes more to repair your vehicle.
Fire and theft
In case your claim is regarding fire and theft, your insurer might reduce your excess. This solely depends on the type of policy and the provider you choose. However, some providers reduce excess amounts for such accidents. These factors determine car insurance’s compulsory excess meaning.
What is a Voluntary Excess?
Now that car insurance excess is explained, the meaning of voluntary excess in car insurance might be a bit more apparent. A voluntary excess is the amount you agree to pay your insurance provider towards any claims you make in case of an accident. Your voluntary excess amount is decided when you renew your insurance or purchase a new vehicle. This is in addition to the compulsory excess.
Don’t miss out our guide on no claim bonus in motor insurance since it will help you save a lot on your insurance. When choosing a voluntary excess, you should pay attention to the factors mentioned below:
Cost
The higher your voluntary excess, the lower your insurance premium. Therefore, it is important to manage your excess rate. Moreover, once you make a claim, as a policyholder you should pay both compulsory and voluntary excesses.
Financial circumstances
Choosing a voluntary amount should depend on your financial situation. Keep in mind that once making a claim, you will have to pay the amount you agreed on. Therefore, always choose an excess that will be possible for you to pay.
Your insurance provider’s approval
Your insurer needs to agree with your excess. Therefore, it is necessary to work out an amount that works for you while getting the approval of your insurer.
Age
Yet again, the age factor plays a big role in this type of excess as well. If you are a young and low-experienced driver, under the age of 25, you can’t reduce your excess since you are considered high risk. This is not related to driving skills and it is solely based on experience.
When Do You Pay Excess on Car Insurance?
Now, you know the exact car insurance excess meaning. You should also consider that insurers are different from one another. Some of them might ask you to pay upfront while others might land you the total bill after the claim.
However, insurance excess is paid only when making a claim. Also claiming someone else’s insurance doesn’t require you to pay excess. Meaning, that you only pay excess regarding damage to your vehicle.
Plus, only when the accident is your fault and you have caused it. If someone else has caused it, you raise a claim on their insurance. Therefore, you pay the excess in the event of the claim. In case of having both voluntary and compulsory excess, you will have to pay both of them at the same time. The total will be reduced from your total. you can read about how to claim insurance for car accident in our blog.
How Much Excess for Car Insurance?
The overall amount of your insurance excess is a combination of the different types of excess you get (compulsory and voluntary) however, the exact amount differs and insurers have their unique policies.
Therefore, checking with your provider and inspecting specific insurance policies help you determine whether the price of an excess is suitable for you. Pay attention to all the details we mentioned in this article to pick the right policy for yourself. It is important to choose an excess that you can end up affording. These might help you determine what is an excess amount in car insurance.
Can I Reduce My Car Excess?
As we talked about earlier in this article, reducing your vehicle insurance excess is possible in some cases. However, it will usually lead to increasing your premiums. Your premiums typically depend on your age, driver’s license, type of car you drive, and its value in the market.
However, a reduction in your excess will result in higher premiums, all affecting your total insurance costs. It is mainly your circumstances that determine whether or not it is a good idea to reduce your excess.
Nevertheless, if you can afford higher premiums and have the right income, it might not be a bad idea to reduce your excess. Plus, if you spend a lot of time driving and you use your vehicle frequently, the probability of an accident is higher for you.
That being said, it is always important to make sure you choose an amount that is right for you. However, we recommend higher excess, since it is usually more practical for most drivers in the long run.
There are several different methods to reduce your vehicle insurance excess if you end up making that decision. Let’s go over a few of these ways:
Increasing your voluntary excess
Voluntary excess is the amount you pay when raising a claim. Therefore, increasing it reduces your premiums.
Get a more expensive Insurance plan.
Getting a more expensive insurance plan from the same insurer reduces your excess since you end up paying higher monthly or annual premiums.
Use your insurer’s discounts.
There are several types of discounts and offers that most insurers provide from time to time. Some of these discounts include multi-car insurance discounts or no-claims discounts. Pay attention to the ones that apply to you and take advantage of them.
Work on your credit score.
Credit history is important in the UAE, like in any other country around the world. Your insurers pay attention to your credit score and building a solid and reliable credit history helps reduce your excess.
Keep a good record
Your driving record is also very important when it comes to renewing your insurance or reducing your excess. Not having black points on your license, making few claims, and causing fewer accidents all add up, resulting in a good driving record.
Conclusion
We talked about car excess insurance and hopefully, answered the most important questions regarding excess in car insurance.
Many drivers don’t know exactly what they are paying for in car insurance excess. Therefore, they end up paying an unreasonable amount of money for a policy that is not very suitable for them in the end.
By using Lookinsure, you can compare and find the best insurance excess deals. Our support staff can help you figure out what factors you should pay attention to and how to reduce excess based on your insurance needs. Keep in mind that your insurance excess depends on your personal driving history as well as your car’s features.
