How Excess Car Insurance Works
Excess car insurance works by providing additional coverage once the limits of your primary car insurance policy have been reached. Here’s a step-by-step explanation of how it works:
- An accident occurs, and you’re found to be at fault.
- Your primary car insurance policy covers the costs up to its limits.
- If the costs exceed your primary policy’s limits, your excess car insurance policy kicks in to cover the remaining expenses.
Example Scenario
Imagine you’re involved in an accident that results in $500,000 worth of damages, but your primary car insurance policy has a limit of $300,000. In this case, your excess car insurance policy would cover the remaining $200,000, ensuring that you’re not left to cover the difference out of pocket.
Damage Excess
Damage excess refers to the amount you must pay towards repairing or replacing your vehicle in the event of an accident or damage. This amount is typically included in your compulsory and voluntary excesses.
By understanding your damage excess, you can make informed decisions about your car insurance policy and choose the right level of coverage for your needs.
Excess Reduction Insurance
Excess reduction insurance is a policy that lowers the amount you need to pay towards a claim. This type of insurance can be particularly beneficial for those with high excess amounts or who want to minimize their financial risk in the event of an accident. Some benefits of excess reduction insurance include:
- Lower out-of-pocket costs in the event of a claim
- Increased peace of mind knowing your financial risk is minimized
- Potential savings on your car insurance premiums
