Greensboro Car Insurance: What Does Excess Mean?

If you run across the word “excess” when dealing with car insurance, chances are you're driving a vehicle in Europe or Australia, where their car insurance policies use the term “excess” where policies written in the U.S. use “deductible.” Both these terms apply to the amount a policyholder is required to pay out of pocket toward a claim before the insurance company pays its portion.

When you first take out your Greensboro Car Insurance coverage you'll be asked to select a deductible amount if your policy includes collision and/or comprehensive coverage. Vehicle liability insurance, which is the only type of coverage NC state law requires you to carry on your car, doesn't have a deductible amount associated with it.

Why Deductible is Required

Although it may be possible to obtain a vehicle insurance policy that includes collision and comprehensive and doesn't require a deductible, this coverage would likely prove to be significantly higher in cost than a standard policy. By requiring you to have a deductible, the insurance company is effectively making you share the risk of something happening to your car. The assumption is that, if you're on the hook for paying a portion of a claim you make, you'll be more careful in the operation of your vehicle.

Statistically, the average deductible on car insurance policies in the U.S. is $500. With a $500 deductible, if you have an accident and the damage repairs total $3000, you must pay the first $500 before the insurer kicks in the remaining $2500. If you sustain damage totaling $500 or less, you'll be responsible for paying the entire amount.

Higher Deductibles Mean Lower Premiums

When choosing the deductible amount for your insurance policy, it's important to consider how much you can comfortably come up with in the event you have a claim and must produce the up-front cash to pay your portion of the repair bill. The advantage of selecting a higher deductible amount is that a higher deductible generally means lower premiums. The reason for this is because higher deductibles lower the amount of financial risk the insurance company faces. If you've been driving for years and have never made a claim against your policy, bumping up the deductible amount to save on premium dollars may be a good idea. You might be surprised at how much you can save just by raising your deductible amount from $500 to $1000.