All insurance policies should be understood properly by the payer. Sometimes this can be challenging because of the amount of information contained. Any thing that is not understood, should be explained by the insurance agent, before a payment is made.

The policy can be manipulated to fit a budget. The excess or deductible is the amount subtracted from the sum received for repairs as a result of a wreck. Sometimes this is presented as a percentage of the vehicle value, and other times it is a fixed amount.

A typical example to explain the importance of the amount of a deductible is the following. An applicant wants insurance on a 2,500 USD vehicle. There is an accident causing 400USD worth of damage. When the policy is checked, the excess or deductible is 300 USD. The insured would pay 300 USD, and the insurance company would pay 100USD. The insured would have to make the decision as to whether reporting this accident would be wise.

Do not jump to conclusions when you find yourself in a wreck. First you should investigate the degree of damage done the your vehicle. Then refer to your insurance policy to see how much you will have to pay according to the amount of your deductible and how much the insurance company will compensate. After gathering these facts, weigh out the situation. Will it cost you more by notifying the insurances company, or would it make more sense to keep it to yourself. Any monies that are paid by an insurance company will result in an inflation of the insured payments somehow.

Instead of filing a claim expecting the insurance company to pay for damages, you can utilize the route of receiving a benefit for not filing a claim. You cannot file a claim and use this benefit at the same time, these two options cancel each other. There may be an incentive via a credit to your premium, or a slightly lowered premium. Also you could be entitled to a payment from the insurance company.

When reviewing a policy there will be several types of deductibles. There is one that is a base across the board for every insured consumer that chooses the company. The others are used as a method to raise the amount the insured is responsible for, in order to decrease the monthly amount paid.

Chances are likely of an excess or deductible having a significant rise, when a rookie driver is applying for insurance. Whether an addition to an existing policy, or a new individual policy, either way the risk factor is increased and the deductible will be raised.

In summary, deductibles and excesses are explained in the policy. The option to evaluate, and change this amount to be more than the base amount, is up to you.

Graham McKenzie is the content Syndication Manager at Insurance123.co.za South Africans leading car insurance information portal