In Motor Insurance, an excess is the amount of money that you usually have to pay if you want to claim your policy. Most insurance policies in Kenya have an excess provision.
The excess is a way of you accepting a small portion of the risk together with the insurance company. An insurance provider usually has various types of excesses that can apply in different circumstances.
Some insurance companies will allow you to increase your excess to reduce your premium. This is one of the most effective ways to save on your car insurance costs.
In the event that you do have a claim to make with the insurance company, you will have to pay more than the insurance provider.
Even though you may be saving some money on the cost of your premium, you must come to terms with the reality that sometimes accidents do happen especially when you least expect it.
What is an excess?
In an accident, the excess is the first amount that is payable by you in the event of an accident. It serves as the uninsurable portion of your accident or loss.
When you have to submit a claim you will have to pay that extra amount of money called the excess. It is usually paid directly to the garage fixing your car before you leave.
With a high amount of excess, when you do have an accident, it is rarely taken into account who is to blame for the incident, you just have to pay the excess either way.
This also deters many people from making claims that are fraudulent or minor. Furthermore, the administrative costs for a car insurance claim are the same regardless of who is at fault.
In Kenya, the excess charged by most car insurance companies is 2.5% of the value of the car. Motor insurance companies also have a minimum value of excess.
How does it work?
The excess is an agreed amount of money that you as the client is liable to pay in event of a car insurance claim being settled.
It serves to instill a sense of discipline and care when you are driving. So as the insurance company is settling a valid claim arising from an accident involving your car, you shall be required to pay a portion of that amount as well.
So if your excess is KES. 250,000 and you make a claim for KES. 1,000,000, your insurance provider will keep the first KES. 250,000 and give you the remaining amount.
Alternatively, if your insurance excess is KES. 5,000 and you have an accident with damages worth KES. 50,000, your insurance company will pay KES. 45,000 once you have paid the excess to the garage repairing your car.
Some insurance providers are able to reduce your premium when you increase your excess because this shifts some risk from the insurer back to you.
So, for you to choose an excess it is highly advisable that you compare the rates of multiple or various premium estimates. Alternatively, also refer to your certificate of insurance for more details on your excesses.
When do you not have to pay an excess?
Most insurance companies can waive the excess if you as their client were not at fault and you can provide the name and address of the person who was at fault.
However, if your car was damaged during a flood, fire, or while it was parked, then you will still be required to pay a basic excess.
Some insurance companies allow you to add extra coverage to your policy so that you will not have to pay any type of excess for claims such as these.
How excess is different from liabilities insurance?
Liability insurance covers you in the event you are in a car accident and it is determined the accident is a result of your actions.
Liability insurance will cover the cost of repairing any property that was damaged during the accident as well as the medical bills from any resulting injuries.
Most insurance providers have a minimum requirement for the amount of liability insurance coverage that drivers must have.
If you can afford it, it is usually a good idea to have liability insurance that is above your minimum liability coverage requirement.
It will provide extra protection in the event you are found at fault during an accident. As you are responsible for any claims that exceed your insurance policy’s upper limit, you would not want to run the risk of having to pay a large amount of money because your policy limit has been exceeded.
Have you taken into account the amount of excess that is being charged on your motor vehicle insurance premium? Would you take a larger excess for a lower premium? Let us know your thoughts below.