Excess 101

Excess is a word that is often thrown around in conversations, especially in the insurance industry. You may not know exactly what it means, but that’s why we are here, to break it down to you in basic language and subsequently, imparting you with knowledge that you may use to explain to others :)
Let’s begin…
What is Excess?
Excess is defined as the first amount that is payable by you in the event of an accident. It serves as the uninsurable portion of your accident or loss. Clear? No? Okay. Let’s try again. When you get into an accident, you will make a claim to your insurer. When this claim arises, it is expected that both you and the insurance company contribute to pay the claim. Excess therefore is your part of the contribution. This means that for every claim, you will be expected to contribute a certain amount of money before the insurance company adds up the remaining balance for repair costs.
How much should i contribute?
This will depend on two things; a) type of claim and, b) the value of your car. Different claims have different excess. Consider the following instances;
- When you get into an accident
Here, your part of contribution is calculated at 2.5% of the value of your car with minimum amount payable, ranging between Kes. 20,000-Kes. 25,000 and the maximum amount is Kes. 100,000. Let’s assume the value of your car is Kes. 1M, then your excess is calculated as 2.5% of 1M which is Kes 25,000.
This means;
- If you get into an accident and the cost of repair is less than Kes. 25,000 (say Kes 17,000), then the cost of all repairs is entirely on you. 🙁
- If you get into an accident and the cost of repair is more than Kes. 25,000 (say Kes 40,000), you’ll cover the first Kshs. 25,000 of the repair costs and the insurer will foot the bill for the remaining Kshs. 15,000. 🙁
2. When your car is stolen
- If your car is stolen and it had an anti-theft device e.g. a car alarm, most insurance companies will charge 10% of the value of your car, minimum amount of contribution is Kes. 20,000 and maximum is Kes. 100,000.
- If your car is stolen and it had an extra tracking device, your excess reduces to between 0- 2.5% of the value of your car, therefore the minimum amount of contribution is Kes. 20,000 and maximum is Kes. 100,000.
- If your car is stolen and it didn’t have any anti theft device installed, most insurance companies charge between 20%- 25% of the value of your car, minimum amount of contribution is Kes. 20,000 and the maximum is Kes. 100,000.
3. When parts of your car are stolen
The excess limit ranges between 0%- 2.5% of the value of your car.
4. When you cause damage to other people’s cars or property
For such a claim, you will be expected to contribute between Kes. 7500- Kes. 10,000 depending on the product.
5. If you are a young driver
In addition to all the excess limits required depending on the claim, young drivers of age 21 years and below are expected to pay up additional excess of between Kes. 5,000 and Kes. 10,000 depending on the specific policy.
6. If you are a novice driver
For inexperienced drivers, they will be required to pay additional excess limit of between Kes. 5,000- Kes. 10,000.
7. If your car is damaged as a result of Political violence or acts of terrorism
For this type of claim, most insurance policies will ask for an excess limit of Kes 50,000 before they settle the claim.
When do you not have to pay an excess?
- Insurance companies may waive the excess if their clients were not at fault after an accident and you will be expected to provide documentation (mostly a police abstract) to prove the same; or
- If you bought a benefit to waive off excess commonly known as Excess Protector or Excess Waiver.
How does Excess Protector/Waiver work?
This is an additional benefit that you pay extra for, to aid you from not contributing to the claim, if the cost of repair is more than the excess limit. It is generally calculated at 0.25% of the value of your car, minimum amount is Kes 2,500. To explain this better, we will use the same two examples;
Assuming the value of your car is Kes 1M, your excess limit is Kes 25,000, you will pay an extra Kes. 2,500 of premium for the excess protector benefit. This means;
- If you get into an accident and the cost of repair is less than Kes 25,000 (say Kes 17,000), then the cost of all repairs is still entirely on you 😞
- If you get into an accident and the cost of repair is more than Kes 25,000 (say Kes 40,000), then you won’t be required to pay anything. 😀
We hope this post has explained what excess is and it now makes sense. Always read up on all the applicable excess before you purchase a motor policy so as to avoid an unpleasant experience when it comes to you making a claim.
See you on our next post!
