What is insurance excess? It plays a crucial role in various insurance policies, whether for your car, home, or pet, shaping how much policyholders need to pay out of pocket when making a claim. At dotsure.co.za, we help you understand what it means, how it works, and how to reduce your out-of-pocket costs when you claim.
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What Does Insurance Excess Mean?
Let’s start with the basics. Insurance excess is the amount you agree to pay upfront when making a claim. Think of it as your share of the cost before your insurer covers the rest. This mechanism helps manage risk and discourages small or unnecessary claims while keeping premiums lower.
How Does Insurance Excess Work?
Excess is applied per claim, not per policy. Your applicable excess must be paid every time you claim, even for different types of claims.
Key takeaways:
- You only pay when you claim.
- The amount varies by policy and risk profile.
- There may be multiple excess types depending on the event or insured item.
Excess on Insurance: Why It Exists
So, why do insurers charge excess at all?
- It prevents excessive small claims.
- It reduces administrative load.
- It allows insurers to keep premiums low overall.
From a business point of view, it’s a risk management tool because if people have to contribute something, they’re less likely to claim small or frequent matters.
Basic Excess Meaning and How it Affects You
Basic excess is the standard, flat-rate amount that applies to most claims. It’s set when your policy begins and is listed on your policy schedule. Basically, it is the minimum amount you’ll pay out of pocket.
For example, let’s look at your motor insurance policy. If the basic excess is R5,000 and the claim is R20,000, the policyholder pays the first R5,000, and the insurer covers the remaining R15,000.
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What Is Voluntary Excess?
A voluntary excess is when policyholders voluntarily increase their basic excess in exchange for reduced premiums. Opting for a higher excess means paying more out of pocket in the event of a claim but enjoying lower monthly premiums.
This is ideal if:
- You rarely claim
- You’d rather save monthly and cover more.
What Does Excess Mean in Pet Insurance?
In pet insurance, excess works a little differently:
-
Fixed excess:
Pet insurance often comes with a fixed excess per veterinary visit or treatment. This can vary based on the policy and service received.
-
Percentage-based excess:
Pet insurance may sometimes have a percentage-based excess, where the policyholder pays a percentage of the total veterinary expenses.
What Is an Excess Buster?
At dotsure.co.za, we offer an additional benefit called Excess Buster that reduces or removes the amount you need to pay in the event of a claim.
If you already have pet insurance with us, log in to your Manage Portal and choose to add excess buster to your policy!
Tips to Manage Your Excess Like a Pro
Assess Your Risk Tolerance:
Consider how much you’re willing to pay out of pocket in exchange for lower premiums.
Review Policy Details:
Understand the types of excesses and their implications.
Consider Mitigating Risks:
Taking steps to mitigate risks (such as parking inside a garage for car insurance) might lower premiums or excess amounts.
Don’t Let Excess Catch You Off Guard
Now that you know what insurance excess is, you’ll know that with dotsure.co.za, you can control your excess, reduce your premiums, and even eliminate excess on Pet Insurance with our Excess Buster benefit.
