Choosing between car insurance with or without excess will depend on your own needs, however, it is important to bear in mind that the value of the premium can decrease considerably when opting for this option. Let’s review what franchises are in-car policies.
When buying insurance for your car, the company can offer you different policy options, which will differ in terms of coverage, premium price, and additional guarantees.
One of the types of car insurance that are sold the most thanks to its characteristics is the All Risk insurance. However, if you are thinking of opting for this policy, you must first decide if you want to do it with or without excess.
What exactly is the excess in car insurance? Let’s take a look at all the details in this guide.
What is a franchise?
To find the right balance between the interests of insurers and clients, the franchise is presented as a resource through which companies can reduce the risks in the event of a claim and the policyholders pay as little as possible for the premium.
This system consists of a percentage or a fixed amount that the insurer establishes with the policyholder and where, in the event of a claim, the latter must assume.
This means that before the need to enforce your policy, the insurer will only reimburse part of the expenses since the other part will be in charge of the client.
If you have taken out insurance with an excess of 500 dollars but the expenses to repair the damage of the claim reach 1000 dollars, the company will only assume the remaining 500 dollars.
It is important that you know that by taking out insurance with a franchise you will not lose any of the coverage stipulated in your policy.
In fact, this modality is only an alternative in case you want to have the best guarantees but without paying a fortune for your insurance.
In other words, it is the best way to insure your vehicle in a complete and cheap way, since the money you will pay in the event of a claim is practically the same that you will save month after month if you decide on this option.
It is also important that you know that, if you have insurance of this type, you will have to assume the franchise every time a claim occurs.
You have two claims during the year. As we said in the previous example, the insurance company covered 500 dollars of the expenses and the other 500 corresponded to your franchise.
In the second incident, the repair costs amounted to only 500 dollars. In this case, the company does not reimburse anything and it is you who must pay for the repair.
Remember that the excess can be applied to the entire insurance or specific coverage.
When does the excess in car insurance work?
By having an All Risk insurance with the franchise, it will not apply to all claims, but will only act to cover Own Damages.
Indeed, the franchise works when you have been responsible for the accident or when there have been no more cars involved.
With or without franchise?
Choosing an All Risk insurance with or without excess will depend, above all, on the price you want to pay for your policy and if you want to assume an extra expense when suffering a claim.
In general, we can say that the decision to make or not this option will depend, in part, on the number of accidents you have per year. Indeed, if you have a low loss ratio, insurance with a franchise can be very convenient.
On the contrary, if you are one of the drivers who suffer several accidents per year, we advise you to opt for insurance without excess.
It is important that when buying your car insurance you pay close attention to the conditions of the contract and also read the fine print.
The best thing will be to compare coverage and prices between different insurers and analyze which are the policies that best suit your needs.