One of the ways you can get the best car policy is by understanding the various concepts and terms that are widely used by insurers. One such example is excess. If you have a car or have experience renewing car insurance, you would probably know that most motor insurance policies are subject to an Excess clause, which is sometimes referred to as a deductible.
In Malaysia, insurance companies tend to divide excess into two types. Let’s learn more about the differences between the two through this article.
What is car insurance excess?
Excess is the initial payment required when filing an insurance claim preceding the coverage provided by your insurer. It is often a fixed amount and made compulsory for policyholders under certain scenarios. They are divided into compulsory excess and voluntary excess, respectively.
While excess is made obligatory for some, it does not factor into claims related to losses or damages resulting from fire, explosions, lightning, theft, third-party property damage, or bodily injuries.
Compulsory excess vs. Voluntary excess
| Compulsory Excess | Voluntary Excess | |
| What is it? | A fixed amount set by insurers towards young, high-risk drivers | An amount that you’re willing to pay when making a claim |
| Why do you pay for it? | – You or your drivers are below 21 years old – Have Probationary (P) or Learner’s (L) licence – Damage caused by unnamed drivers | – You are a vehicle owner below 21 years old – Your vehicle is at higher risk of theft – You have an expensive car |
| How much do you pay? | RM400 | A certain percentage of the sum insured |
Can I change my voluntary excess?
Yes, you can alter the voluntary excess you have set with your insurance provider, as this is an amount that you’re willing to pay when making a claim.
Increasing your voluntary contribution will reduce your auto insurance rate, but it may negatively impact the cost of filing a claim as you would need to absorb more of the cost. So, even if you can afford to pay the excess, consider how changing your voluntary contribution can affect your insurance price before making the call.
When do you pay the excess?
You are required to cover both your compulsory and voluntary contributions when filing a car insurance claim. In the event of a minor road accident, your excess may be more than the repair cost, especially if you opted for a higher voluntary excess.
In such a case, determine whether it is worthwhile to proceed with an insurance claim as it could affect your No-Claims Discount (NCD).
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