In many cases, insurance policies do not pay the total cost of a covered loss. Consequently, you are responsible for paying the remaining debt for a covered incident. For instance, an automobile insurance policy will cover 70% of the damages incurred in a car accident, but the policyholder is responsible for the remaining 30%.
Before the insurer will pay the remaining 70% to cover the total loss or damage, you, the policyholder, must pay the remaining 30%. The majority of insured South Africans cannot afford to pay such a substantial sum all at once. Consequently, a product such as an excess waiver is necessary.
The excess waiver enables policyholders to invest so that any insurance policy deficiency is covered by the excess cover. Let’s have a look at the following before moving forward. What exactly is an Excess Waiver, and how does it function? As we answer these questions, we will examine the operation of an excess cover and more.
What is an Excess Waiver?
The amount paid for coverage beyond the basic liability limit of an insurance policy is known as the excess waiver. An excess waiver is a type of coverage that exceeds an insurance policy’s limitations. In South Africa, however, multiple terms are used to refer to an excess waiver, and the term “gap cover” is used to refer to the coverage that pays beyond the medical aid deductible.
The excess waiver insurance cover is adaptable to the client’s insurance needs and protects against costly excesses. This product is frequently marketed independently, but it can also be added to an existing insurance policy through an in-house insurance facility.
Characteristics of an Excess Waiver Insurance
- Excess Waiver is the amount paid for cover beyond the basic liability limits in an insurance contract.
- This insurance product is mostly offered as a stand-alone product.
- The product can be taken as a byproduct of an insurance policy that does not cover the total loss or damages that may be incurred as a result of a covered incident.
- Excess Waiver is mostly for insurance products that have a predetermined reimbursement schedule. For example, an insurance policy will state that it only covers 85% of the damages or losses caused by a covered incident.
How does Excess Waiver Insurance Work?
One of the terms of insurance contracts is the coverage amount or percentage of the obligation covered by an insurance product. Due to the fact that these expenses are predetermined at the time of contract signing, an excess amount can be budgeted to cover the risk in excess of the insurer’s liability.
A waiver of excess provides additional coverage if a covered event exceeds the amount covered. For instance, a R1000.00 dent cover may be acquired, but if the policyholder incurs dent charges totaling R1500.00, excess waiver insurance will reimburse the R500.00 extra that the policyholder was forced to pay.
As with any other insurance policy, excess waiver insurance has its own limitations. Excess Waiver Insurance has a coverage limit as well. For instance, you may have R100,000 in motor accident coverage and an excess waiver of up to R200,000.00. Consequently, excess waiver insurance will only cover up to R200,000.00 in damages and losses.
Due to the fact that an excess waiver is often a standalone product, premiums may be expensive. The more your premiums will be, the greater the coverage you require. When your insurer offers additional coverage at an added cost but with discounts, excess waiver insurance may not be the best option for additional coverage.
What to consider when purchasing an excess waiver insurance
When looking for excess waiver insurance, there are two things to consider: whether the insurer you are using offers excess waiver insurance and whether you should look into the reinsurance market.
In-house
When seeking excess waiver insurance, the first step is to look from the insurer that you are using. In-house excess waiver insurance has several advantages, such as a discount on rates for both your excess waiver insurance and your main insurance product.
There aren’t many insurers who offer excess waiver insurance, so in most cases, you’ll have to look elsewhere for coverage.
Reinsurance Market
Reinsurance Market is the most reliable source for excess waiver insurance. The market for reinsurance is saturated with tiny risk finance companies backed by large insurers. Typically, excess waiver insurance from a reinsurance market is a standalone insurance policy that enhances your primary insurance coverage.
You will undergo a distinct underwriting process and be priced according on your present risk profile. Consequently, the insurer will offer you with revised contract terms. You will then be required to select the desired coverage amount for your excess waiver limit.
Advantages of the Excess Waiver Insurance
- Provides coverage for sums that are not covered by your current insurance policy.
- The amount insured is configurable, and the amount can be adjusted to meet the insurance needs of the individual.
- Premiums for in-house excess waiver insurance are sometimes discounted.
- There are many insurers for this type of insurance, therefore, you can get competitive prices.
Disadvantages of the Excess Waiver Insurance
- Amount that is insured by an excess waiver insurance may not be able to fully cover the excess amount payable.
- Using a third party insurer may make the cost of the Excess Waiver Insurance a bit high when compared to getting in-house excess waiver insurance or increasing the cover amount on your primary insurance policy.
Conclusion
If you have an insurance policy that demands an extra payment, Excess Waiver Insurance is something to consider. Looking in-house first can save you money on premiums and is regarded as the finest approach to obtain cost-effective excess waiver insurance.
