If you spend a large amount of your time on our roads, you’ve probably seen them.

“Seen what?” you might ask. Those expensive new cars with dents and dings that are starting to rust. Not a pretty sight, is it?

Surely, if you can afford a R1 million car, you can afford the insurance policy that comes with it, right? 

Well, we have a theory…

Some South Africans are buying expensive cars they cannot really afford or maybe the car was affordable when they bought it three years ago, but it’s no longer the case with the price of electricity, fuel, and groceries going through the roof. When it comes to choosing between feeding your family and paying for car insurance, there is only one option.

Another theory we have is that many car insurance policy holders negotiate a very high excess upfront to offset the monthly cost of their insurance. 

When you take out car insurance you have the choice of: 

• Opting for a flat excess.
• Opting for a % based excess.

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The benefit of a flat excess is that you’ll always know what you’ll be in for when you need to claim. 

Here’s an example to illustrate the difference between the two excess options – Let’s say you have a car worth R1.5 million and you opt for a flat excess of R10 000 when you take out the policy.

If your car is completely written off or it gets stolen, you will only be liable to pay the insurance company R10 000 before they pay you out. If you opt for a 5% excess, in this case, you would owe the insurance company a whopping R75 000 excess before they would process your claim. 

Do you have that type of money lying around?

Insurance companies use the “excess clause” as a bargaining chip at quote stage. If you want rock-bottom monthly insurance premiums you’ll need to live with super-high excesses at claim stage.

If you want a middle-of-the-road insurance premium, you are going to get a middle-of-the road excess. And you guessed it, if you want a very low excess option, expect to pay a little more in the way of premiums month-to-month. 

Our suggestion is to think about the following:

You know how much your car is worth, so work out if a flat or %-based excess is going to be better for you in the long run. Get a few comparative car insurance quotes, but pick the same excess options with each one so you can compare apples with apples.

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Best regards,

The Go Insurance Team