5 Things Every Woman Should Know About Insurance Excess

Insurance excess is one of the most important parts of your insurance policy, yet it's often overlooked until the moment you need to claim. Whether you're insuring your car, home, or household contents, understanding how excess works can help you avoid unexpected costs and make better financial decisions. If you're comparing cover from First for Women or reviewing your current policy, it's worth taking a closer look at how excess affects both your monthly premium and your potential claim costs. For homeowners, it's also important to understand how excess applies to your building or home contents cover before disaster strikes.

 

 

The insurance cost most women only discover when they need to claim

 

 

Imagine this: you've paid your insurance premium every month without fail. Your policy is active, your vehicle is covered, and you believe you're financially protected if something goes wrong.

 

Then the unexpected happens.

 

A shopping-centre parking lot accident leaves your car damaged. A storm damages your roof. A break-in results in stolen belongings. You submit a claim expecting your insurer to cover all the costs, only to discover that you must first pay an excess of several thousand rand. This scenario is surprisingly common. Most policyholders know exactly what they pay in monthly premiums, but far fewer know what they would need to contribute if they submitted a claim tomorrow.

 

That's why understanding insurance excess: the cost-sharing rule many women overlook is so important. In South Africa's current economic environment, households are facing ongoing financial pressure from rising living costs, fuel expenses, food inflation, and electricity price increases. An unexpected excess payment can therefore create significant financial strain during an already stressful situation.

 

This is why excess matters just as much as your premium. While many consumers focus exclusively on finding the lowest monthly premium, the financial impact of choosing the wrong excess can be substantial when it's time to claim. What every woman should know before submitting a claim is that insurance isn't only about protecting your assets. It's also about being financially prepared for your share of the cost when something goes wrong. Fortunately, a little knowledge can go a long way. Here's a simple insurance concept that can save you from expensive surprises. Discover more about the five things you need to know about insurance excess. 

 

 

1. Excess is the amount you pay when you claim

 

 

If you've ever wondered, “what is insurance excess?”, the answer is actually quite simple. Insurance excess is the first amount you pay when you claim and is indicated on your schedule.  It's your portion of the claim cost.

 

Importantly, excess is not an additional fee charged by your insurer. It's not something you pay every month. Instead, it only becomes payable when a valid claim is approved. This helps keep insurance more sustainable and affordable for everyone. Insurance excess explained in practical, everyday terms: think of it as sharing part of the cost with your insurer. For example:

 

• Repair cost after an accident: R30,000

• Excess payable: R5,000

• Insurer contribution: R25,000

 

In this scenario, you pay the first R5,000, and your insurer covers the balance in accordance with your policy terms and conditions. Always know how much you'll need to pay out of pocket, where an excess applies to your policy. Understanding this amount upfront helps prevent unpleasant surprises later. This is also how excess influences your insurance payout when it matters most.

 

 

2. A lower premium often means a higher excess

 

 

One of the most important principles of insurance is the trade-off between premiums and excesses. In many cases, choosing a higher excess can reduce your monthly premium. Conversely, selecting a lower excess generally increases your premium. This creates the balance between affordable premiums and manageable excesses. Many consumers understandably focus on reducing their monthly expenses. However, a lower premium often comes with a higher excess, which means you could face a higher out-of-pocket cost when claiming. Consider these hypothetical examples:

 

Policy A

• Monthly premium: R750

• Excess: R10,000

Policy B

• Monthly premium: R950

• Excess: R3,500

 

Policy A may appear cheaper at first glance, but would you be able to access R10,000 immediately after a claimable event?

 

For someone with substantial savings, the higher excess might be manageable. For someone living on a tighter budget, Policy B could offer better financial protection despite the higher premium. This highlights why the cheapest premium isn't always the most affordable option overall. When comparing quotes, don't simply ask how much you'll save each month. Ask yourself how much you'll realistically be able to contribute towards excess if you need to claim.

 

 

3. Your excess should match your financial reality

 

 

Insurance decisions should always reflect your personal financial circumstances. When choosing an excess amount, one of the most important questions to ask yourself is:

 

"Could I comfortably pay this amount tomorrow if my vehicle was stolen or my home was damaged?"

 

If the answer is no, your excess may be too high. Many people view excess as simply an insurance setting. In reality, it should form part of your broader financial planning and emergency preparedness strategy. Unexpected losses rarely happen at convenient times. A claim often arrives alongside other financial pressures, making a large excess even more difficult to manage.

 

That's why your excess should fit comfortably within your emergency budget. Consider a single mother who chooses a high excess to reduce her monthly insurance costs. While the savings may help her manage monthly expenses, a large excess could prove difficult to cover if she suddenly needs to replace a stolen vehicle or repair accident-related damage.

 

This illustrates the financial impact of choosing the wrong excess. Ultimately, making smarter insurance decisions starts with understanding excess and ensuring your chosen amount aligns with your available savings and financial resilience. For many households, an emergency fund and excess planning should go hand in hand.

 

 

4. Not all excesses are the same

 

 

One of the biggest misconceptions about insurance is that every claim attracts the same excess. In reality, many policies contain multiple types of excesses that may apply under different circumstances. Examples include:

 

• Basicexcess

• Additional excesses may apply

• Theft-related excesses

• Special excesses for specific risks such as:

 

-Age-related risks, e.g. driving a performance car under the age of 25

-Licence that is less than 2 years old

-Power surge/lightning claims.

 

This means different claims may attract different excess amounts. In some situations, multiple excesses may apply simultaneously, depending on the policy wording. This is why it's essential to read your policy schedule carefully. Always check your excess before lodging a claim so you understand what financial contribution may be required. Failing to understand these details can lead to unexpected excess costs that can place additional strain on household finances. When reviewing your cover, don't focus only on the premium. Review every excess listed in your policy documentation.

 

 

5. Reviewing your excess could save you money

 

Many people review their insurance premiums every year but never revisit their excess choices. That can be a missed opportunity. Your financial circumstances evolve over time. Income levels change, savings balances fluctuate, assets are acquired, and family responsibilities shift. An excess that made sense five years ago may no longer be appropriate today.

 

For example, someone who selected a very high excess when money was tight may now have a stronger emergency fund and greater financial flexibility. They may prefer to reduce their excess for additional peace of mind. The key is to make an informed choice based on your current financial position. Reviewing your excess annually can prevent costly surprises and ensure your cover remains aligned with your needs. Most importantly, understanding excess today can make claiming less stressful tomorrow. 

 

 

Frequently asked questions

 

 

• What is insurance excess?

Insurance excess is the amount you agree to pay towards a claim before your insurer contributes. If your claim is approved, you pay the excess, and the insurer covers the remaining amount in accordance with your policy terms and conditions.

 

• How does a higher excess affect my insurance premium?

A higher excess generally reduces your monthly insurance premium because you're agreeing to contribute more towards future claims. However, you'll need to ensure you can afford that amount if a loss occurs.

 

• Do I pay excess every month?

No. Excess is not part of your monthly premium. It is payable only when you submit a valid claim that is approved, subject to the terms and conditions of your policy.

 

• Can different types of claims have different excess amounts?

Yes. Different excesses may apply for theft, car accidents, storm damage, or other specified risks. Always review your policy schedule for details.

 

• How do I choose the right insurance excess?

Choose an excess you could realistically afford to pay if you needed to claim tomorrow. Consider your savings, monthly budget, and financial responsibilities rather than focusing solely on lowering your premium.

 

 

Get a First for Women insurance quote

 

 

Understanding insurance excess is one of the simplest ways to make more informed insurance decisions. The right excess can help you balance affordable premiums with financial protection when you need it most. If you're reviewing your current cover or shopping for a new policy, take the time to carefully compare both premiums and excess amounts. Get a First for Women insurance quote online today and choose cover that suits your budget, lifestyle, and long-term financial goals.

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Sources:

 

Mail&Guardian: South Africans hit hard by the rising cost of living 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial advice. First for Women is a licensed non-life insurer and FSP, Ts & Cs online.