Why a single insurance claim can trigger more than one excess, two worked examples for motor and home claims, and how to know what you will owe before it happens.
An excess is the amount you agree to pay, out of your own pocket when you submit an insurance claim, before your insurer covers the rest. It is the single most misunderstood number on a policy schedule, mostly because South African policy schedules list more than one type of excess.
When two or more apply to the same claim, and they often do, the total you owe before the insurer pays out is called an accumulative excess. Here is how it works, with real examples.
The four types of excess you will see on a South African policy
- Basic excess: The standard amount that applies to most claims of that type.
- Voluntary excess: An additional amount you agreed to take on in exchange for a lower monthly premium.
- Age or experience excess: Applied if the driver was under 25 or had less than two years’ driving experience.
- Specific event excess: Applied to particular claim categories such as theft, hail, or water damage, sometimes because of the area you live in, sometimes because of recent claims history.
- Time Excess: In certain instances, such as business interruption claims, the business would need to be without power or services for a specified amount of time before the business can claim – usually 24 or 48 hours.
Two ways excesses are calculated
- Flat excess: A specified rand amount, regardless of the claim size.
- Percentage-based excess: A percentage of the claim amount, usually with a minimum payable. The bigger the claim, the bigger the excess.
- Time excess: Mostly used for interruption claims: a minimum time period (such as 24 hours) must pass before cover kicks in.
Example 1: motor accident
A 23-year-old driver in your household has an accident. The repair quote is R60,000.
Accumulative excess breakdown:
- Basic excess: R2,500
- Voluntary excess: R1,000
- Age excess (under 25): R1,500
Total excess payable: R5,000. That R5,000 goes to the panel beater before the insurer covers the rest of the repair, an amount of R55,000.
Example 2: burst geyser at home
The geyser bursts and water runs through the ceiling onto the kitchen floor. Repair and replacement comes to R45,000.
Accumulative excess breakdown:
- Basic excess: R2,000
- Voluntary excess: R500
- Specific event excess (water damage): R1,000
- Geyser excess: R1,000
- Resultant damage excess: R1,500
Total excess payable: R6,000. That goes to the contractor before the insurer covers the balance of the R45,000 claim, approximately R39,000.
Why this matters
- Budgeting. Knowing the worst-case out-of-pocket figure means you can keep an emergency fund equal to your largest accumulative excess.
- Choosing your premium. A higher voluntary excess buys a lower monthly premium. That trade-off only makes sense if you can actually afford the excess on the day it lands.
- Avoiding surprises. The middle of a claim is the wrong time to discover you owe R6,000 before any work begins.
How to find your own excesses
Every excess that applies to your policy is listed on your policy schedule, under each section of cover. If reading a policy schedule feels like reading a bank statement in a foreign language, send it to us and we will mark it up for you.
When to ask your broker about adjusting an excess
- When a young driver is added to or removed from the policy.
- After a claim, especially if a specific event excess has been applied.
- When you take out a loan or buy a property, as your need for predictable monthly costs may have shifted.
The bottom line
Excesses are not punishments. They are how insurers keep premiums down by sharing a small amount of every claim with the policyholder. The trick is making sure the rand amount on the day of the claim is one you can actually afford. Your broker can help you tune that number.
Not sure what your excesses add up to?
We read policy schedules for a living. Send us yours and we will tell you exactly what you would owe out of pocket on your biggest likely claim.
Related reading
This article is for general information only and does not constitute financial or legal advice. Insurance policy terms vary by insurer. Graham Silva Insurance Consultants CC, FSP No. 5671, is an authorised financial services provider regulated by the FSCA.