What is Car Insurance Excess | Insurance Excess Explained

We feel that it is our duty to guide our readers and customers about everything there is to know related to automobiles. As a result, we try to bring you informational content on a wide range of topics. As you know, PitStopArabia is a one-stop platform for many services, including tires, car battery, and automobile insurance.

In this blog post, we will talk about something related to automobile insurance. You might recall that we talked about how different factors affect the insurance premium. The factors ranged from external to the car owner themselves. Well, there is another factor which impacts the insurance premium, and it is referred to as car insurance excess.

What is Car Insurance Excess?

When deciding on the insurance package, the company representative will ask how much excess will you pay? Excess is the amount the policyholder must pay when they make a claim. For example, the car was involved in an accident. The total damage was AED 1,000. The insurer might pay AED 600. The remaining AED 400 will be paid by you, and that is referred to as the excess.

The next logical question is, who determines the excess amount? To answer this question, you need to understand the two different types of excess.

Types of Car Insurance Excess?

There are two types:

Compulsory

Compulsory excess is the minimum amount that must be paid by the policyholder when filing a claim. The amount is determined by the insurance provider. When taking out an automobile insurance policy, make sure to check this amount. Driver’s age, occupation, car type, and other factors are used to determine the compulsory excess.

Voluntary

Any amount that is paid on top of the compulsory excess is known as voluntary excess. For example, the compulsory excess is AED 300. While taking out the policy, you wish to pay an additional AED 100. The additional amount is voluntary excess. Remember, the higher total your excess, the less premium you will be charged.

In the next section, we will answer some frequently asked questions related to the car insurance excess.

Car Insurance Excess FAQs

Can You Change Compulsory Excess?

The short answer is no. This is the minimal amount that must be paid by all insurance holders and is determined by the insurer. However, negotiating with the representative might help you get a reduction in this amount.

Should You Opt For Voluntary Excess?

As said earlier, by going for a higher excess, you can reduce the insurance premium. However, there is no formula to calculate the optimal value for voluntary excess. In some cases, paying a high voluntary excess can actually backfire. Consider the example below to develop a comprehensive understanding of how voluntary excess works.

While driving, you end up in a collision. The total damage to the vehicle is AED 700. The compulsory excess was AED 400. While taking out the policy, you opted for a voluntary excess of AED 300. Now, you are required to pay AED 700 in total. The insurance provider will pay nothing. In such a scenario, there is no benefit of having car insurance.

Do You Have To Pay The Compulsory Excess In All Cases?

There are some claims which can be made without paying the compulsory excess. However, it is dependent on the insurance provider. Therefore, you must consult with your insurance provider to get the required information.

Wrap Up

This concludes our blog post. Keep checking back for more informational articles on everything automobile. Lastly, we recommend going through your insurance policies in detail before signing them. It can help you avoid problems when filing a claim. Thank You.