Knowledge Hub

This is one of the first questions people ask when comparing car insurance. If you choose a higher excess, will your monthly premium come down?

The short answer is usually, yes. But there's more to it than that.

Like most things in insurance, it's about finding the right balance. Saving a little every month sounds great, until you need to claim and discover your excess is more than you can comfortably afford.

Here's how it all works.

First things first. What’s an excess?

 
An excess is the amount you agree to pay towards a claim before your insurer pays the rest, subject to your policy terms and conditions.

Let's say your car is damaged in an accident and the approved repairs come to R30 000. If your excess is R5 000, you'll pay the first R5 000 and your insurer will cover the remaining approved amount.

It's your contribution to the claim. And the amount you choose can influence what you pay every month for your insurance.

So, does a higher excess lower your premium?

In many cases, yes. When you choose a higher basic excess, you're taking on more of the financial responsibility if something goes wrong. Because you're carrying more of that risk, your insurer may reward you with a lower monthly premium.

But there's no universal formula.

The difference in premium depends on several factors, including but not limited to:

·       Your age and driving experience.

·       Your claims history.

·       The type and value of your vehicle.

·       Where you park it.

·       How much you drive.

·       The level of cover you've chosen.

·       Your overall insurance risk profile.

Your excess is only one piece of the puzzle.

Lower premiums today. Bigger bill tomorrow?

This is where it's worth thinking beyond your monthly debit order. Choosing a high excess might save you money every month. But if you need to claim, you'll need to be able to pay that excess before repairs or settlement can proceed.

Ask yourself one simple question: If I had to claim tomorrow, could I comfortably afford this excess? If the answer is yes, a higher excess could make good financial sense.

If the answer is no, the monthly saving might not be worth the pressure when you need your insurance most.

There’s no right answer. Only the right answer for you.

 
Some drivers prefer a lower monthly premium and are happy to take on a higher excess because they have savings set aside for emergencies.

Others would rather pay a little more every month, knowing they'll have less to pay if they ever need to claim. Neither option is better. It simply depends on your budget and your circumstances. The goal isn't to find the cheapest insurance. It's to find cover that still works when life doesn't go according to plan.

Don’t forget that different excesses can apply

It's also worth remembering that your policy may include more than one type of excess.

Depending on the circumstances of your claim, your policy could include:

·       A basic excess.

·       Additional excesses that apply in certain situations, such as specific drivers or particular claim types.

That's why it's always worth understanding exactly what's included in your policy before making a decision.

Choose cover that fits your life

At Dialdirect, we believe insurance should make sense. That means giving you options that work for your budget today, without creating unnecessary surprises tomorrow. Whether you choose a higher excess to lower your premium or prefer the peace of mind of a lower excess, the important thing is knowing exactly what you're choosing.

Because good insurance isn't just about paying less every month. It's about knowing you've got cover that works when you need it most.

Get a quote at dialdirect.co.za or call 0861 555 580.

Dialdirect is a licensed non-life insurer and FSP. Ts&Cs apply.