What is Excess in relation to Car Insurance?

When first purchasing auto insurance there’s a lot jargon that can be confusing. First off, you must know about an excess. An excess is a fixed amount of money that has to be paid every time car repairs are paid for by the insurance policy.

There are two different kinds of excesses.

For one, there’s a compulsory excess which is the smallest excess payment that your insurer will agree to take. This differs according to your own personal demographic, driving record, and of course, insurance company.
A voluntary excess is an excess that you agree to pay on top of the compulsory excess in case of a claim on the policy. A bigger excess reduces financial risk for the insurer, and thus they can offer lower premiums.

Depending on the locality of the insurer, premiums may be mandated by the government or based on statistics. The premium can depend on many different factors that the insurer has found to statistically affect the cost of future claims including age, driving history, gender, and purpose of the car. We will provide some demographic data that can affect your auto insurance premiums.

Gender - Studies have shown that men average more distance driven per year than that of women, and therefore, have a higher proportionality of accident involvement. Insurance companies, in turn, tend to offer lower premiums to women as opposed to men
Age - Since teenage drivers have no driving record, it follows that they would be less experienced on the road. Insurance companies, then, offer these young higher driving premiums. Teenagers can then lower their driving premiums by going through further driving training than what was required to obtain a license.
Car Usage and Purpose - The more you use your car, it can be deduced, the more potential for accidents, and, thus, more potential for claims on the policy. Insurers are able to estimate car usage by GPS, OBDII (OnBoard Diagnostic) based systems, and odometer. The GPS system tracks the usage of the car as it travels and records the distance it has traversed. The OBDII system functions by using the TripSense device which connects to a computer’s OnBoard Diagnostic port that was built in all cars after 1996. With the odometer, customers can buy prepaid insured miles and maintain a track of them on their odometer to determine when they need more.

With all of these factors, an agent’s advice can help you clear the air about what you and your family need from a car insurance policy. Call one of our agents today to learn the intricacies of your Arlington auto insurance situation and find a policy that’s right for you at 817.635.0375.

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