Virtually every motor insurance policy is subject to what we call a policy excess. This is the amount of money that a policyholder will have to pay towards a claim. And it’s the first amount, over and above that amount, the claim is met in full by the insurance company.
Different types of excess on a Motor Insurance Policy
There are two types of excess on a motor insurance policy they are, compulsory and voluntary excess.
Compulsory Motor Insurance Excess
Compulsory excess is broken down into excesses for:
- Accidental Damage: For example, 2.5% of the vehicle value subject to a minimum of Kshs 15,000.
- Fire and Theft: For example, theft where the car has an anti-theft device, 10% of the vehicle value subject to a minimum of 20,000.
- Third-Party Property Damage: This applies where you are in involved in an accident and damage third-party property such as other cars, buildings, roadside fixtures etc. A flat amount would be applied as excess, for example, Kshs 7,500.
Virtually every policy has a compulsory excess. In addition to this, young, new and inexperienced drivers have additional excesses applied on top of the compulsory excess. In Kenya, most insurance companies will deem a driver young if they are under 21 years old and inexperienced if their driving license is less than 1 year old.
Why Do Young, Inexperienced And New Drivers Have To Pay An Additional Excess?
Young, experienced and new drivers have extra excesses applied simply because of the fact that their inexperience leads to a higher incidence of claims. This is a proven fact and, therefore, insurance companies apply this to help manage the risk. The additional excess ranges from between Kshs 5,000 to Kshs 20,000 for young drivers and between Kshs 5,000 and Kshs 20,000 for inexperienced drivers. A driver who is both young and inexperienced will have a higher additional excess than one who is simply inexperienced but over 21 years old.
If your car was written off or stolen would you have to pay the excess?
In the circumstances where the car is a total loss, either by accident, theft or fire, the excess is an amount which is deducted from the value of the car when the insurance company pays you. If the claim is for the repair or damage to your motor vehicle, you will pay the excess to the insurance company before you collect your vehicle from the repairing garage after repairs have been completed.
This is not very common in Kenya. It is an additional excess on top of the compulsory excess that is taken voluntarily by the policyholder in return for a reduction in premiums.
Is There an Excess for Windscreen Damage?
Windscreen damage is not usually subject to an excess and is paid for in full.
Tips to Avoid Motor Insurance Excess
There are two ways you can avoid paying motor insurance excess in the event of loss or damage.
- No blame no excess: If you’re involved in an accident, which was not your fault, you may not have to pay the excess if your insurer offers this benefit. However, this is subject to a Police Abstract blaming a named Third Party.
- Buy Additional Coverage Known as Excess Protector: Excess protector insurance is an optional benefit on your motor insurance policy. You can take it to cover the excess on accidental damage only or on accidental damage, fire and theft. The minimum premium additional premium to buy this extra coverage is usually Ksh 5,000 per year. The effect of this additional coverage is that you will not have to pay any excess and/or your settlement will not be reduced to deduct the excess.
When purchasing motor insurance. It’s very important to have your agent or provider fully explain and give you a breakdown of the policy excesses that apply so that there are no misunderstandings when a claim arises.