Explaining Insurance Excess
Whenever you sign up for auto insurance, they’ll ask you a lot of questions before they draft a quote. One of the terms which you may hear repeatedly is the excess. It’s imperative that you understand the meaning of this word before you decide to accept anything. So what is excess?
The excess is how much money you have to pay in before the insurance company will pay out for a claim. For instance, if you are getting your car repaired, you have to pay a certain portion to the repair company first before the car insurance company will pay out the balance. Your excess is calculated on a range of factors, but is also largely dependant on you.
Some of the factors that give rise to your excess include your age and even your gender. Thereafter, you have to decide how much you want to pay for your excess. The more expensive you make your excess, meaning the more you will pay in when you have to claim, then the lower your monthly premiums will be. This is all very well, as long as you are certain that you will be able to afford the high excess should you ever need to pay out. Since you will be saving on your monthly insurance premium, you should consider setting aside a small amount of funds every month in a savings, in case you should ever need to pay out for the excess.
There are, however, some components of your motor vehicle which carry compulsory excess. When you sign up for your policy, your insurance company will let you know what those items are, and how much excess you will be paying.
If you have decided to go with a higher excess option, then you should take careful consideration before claiming. Something as simple as a cracked car light may not require an insurance claim. The amount you will have to pay out on excess could land up costing more than the actual value of the repair. In this case, it might be more logical for you to simply pay for the repairs yourself.
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