It might be tricky to understand a auto insurance policy if you never used it before. These contracts include professional terms that you might not be familiar with, and one of them is excess. If you come across the term excess, or someone requires you to pay it as a part of the insurance policy, you want to know what it is first. Here is a detailed guide on what you should know about a auto insurance excess and how much you need to pay for it.
What Is Excess On Your Car Insurance?
The critical thing to know about the auto insurance excess is that it is the sum you have to pay per claim because the provider doesn’t cover it. Your policy will determine the potential excess cost for any payable claim. Here are some factors that could be considered excess:
- Paying damage to a third-party because you were liable for damages to their vehicles, property, etc.
- Any expenses you need to pay as a part of processing and conducting the claim.
- The insurance only agrees to pay a certain sum, and you need to invest personal funds for repairing the damages on your vehicle or property.
There isn’t an exact definition of all expenses that could fall into the excess category. However, it is safe to say that those are “the insurance policy owner’s expenses that the provider isn’t required to pay.”
How Much Will Your Auto Insurance Claim Excess Cost?
Let’s imagine a situation – you participated in a vehicle accident that wasn’t your fault. Therefore, you decided to file a claim to your insurance company. Now, the total claim sum might be MYR2,500, but your excess is MYR250. That could happen because the insurance company agreed to pay MYR2,500, but it also happened that you are liable for the third-party damage. That’s the MYR250 part that the provider refuses to pay. The insurance provider might have a policy that you need to pay for filing a claim, or they might have other expenses related to the claim. You could count them towards the excess sum, too.
What Is a Compulsory Excess Fee?
The previous section referred to the excess related to your policy. However, there is also the so-called CED – Compulsory Excess Fee. That’s a sum that the law requires certain persons to pay. Here are the categories of drivers who fall into that category:
- Drivers who are younger than 21
- Drivers that only have an L (probational) license
- Drivers with P license
- Those that are not policy owners and drive someone else’s vehicle.
Some people consider this a fine, and that would be a reasonably acceptable explanation. It doesn’t matter which category you fall into because the compulsory excess charge is always MYR400. If anything, you will always know how much this fee is since it cannot vary unless changed by the regulations. The compulsory excess charge is something to consider if you drive a friend’s car or someone else’s vehicle. That covers the basics of car insurance excess details. As you can see, they are not complicated, but they will be a hit to your budget. The exact amount will depend on many factors. That is why you should analyze the policy and claim carefully or consult an expert to reveal more about this area.