Explaining Insurance Excess
When you sign up for auto insurance, they’ll ask you many questions before they draw up a quote. One of several terms which you may hear repeatedly is the excess. It’s imperative that you understand the meaning of this word before you 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 example, if you are having your car repaired, you have to pay a specific portion to the repair company first before the car insurance company will pay out the balance. Your excess is calculated on a variety of factors, but is also largely dependant on you.
Some of the factors that contribute to your excess include your age and even your gender. Thereafter, you need to choose how much you want to pay for your excess. The bigger 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’ll be saving on your monthly insurance premium, you should look at setting aside a small amount of funds each month in a savings, in case you should ever need to pay out for the excess.
There are, however, some items in 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 may be more logical for you to simply pay for the repairs yourself.