Vehicle insurance excess in Rwanda: Everything you need to know

Insurance jargon shouldn’t stop anyone from understanding how their cover works. One word that people trip up on in particular is “excess”. In this blog we go over what an insurance excess is, the different types, when you will have to pay it and how to choose one that’s right for you.

** “Insurance excess" is the amount of money or a portion in percentage you agree to pay out of your own pocket when you make a claim on your insurance policy. **

Why are there excesses in the first place?

Your policy has an excess to make sure that you have some skin in the game – knowing that you’ll have to pay a portion of the claim usually means that you’re more inclined to drive responsibly and keep your vehicle safe. Another reason is that it prevents small claims, which help to reduce the cost of an insurer providing the insurance. So your excess is key to making insurance premiums more affordable.

What types of excesses are there?

Different insurers have different types of excesses. Be sure to ask your insurer upfront what types of excesses they have so that you are not caught off guard when it comes to claiming.

Flat amount excess

Many insurers will have a set, flat amount that you will have to contribute towards every claim. For example, if your excess is 200.000 Frw, you will contribute that amount to every claim you make, irrespective of the amount of the claim. Some insurers will allow you to choose a flat excess from a range.

Percentage of claim excess

Some insurers have a percentage excess that is proportionate to your claim. For example, your insurer might say that you have a 5% of claim excess. So, if you have a claim of 1.000.000 Frw, you will contribute 10% (i.e. 100,000 Frw) and your insurer will pay the remaining 900,000 Frw. These types of excesses are more difficult to budget for and could easily add up to very large amounts. For example, if your 30.000,000 Frw car is stolen, your contribution would be 3.500.000 Frw.

TIP: Keep an eye out for a minimum excess when insurers offer percentage based excesses. For example, your insurer has a percentage excess set at 10% and a minimum excess set at 300.000 Frw. This means that if a claim is less than 300,000 Frw, the minimum excess will be applied and your insurer will not pay a dime. However, if your claim will cost 350,000 Frw, you’ll have to pay the minimum excess of 300,000 Frw and your insurer will only pay 50.000 Frw

It is best to ask your insurer about any additional excesses before you purchase your policy to make sure you don’t get any nasty surprises at the claims stage.

When will I have to pay an excess?

You will be responsible for the excess every time you make a claim. You might have to pay the money or it could take the form of a reduction in the payout to you.

** TIP: It’s possible you’ll need to claim more than once in a year, and you’ll need to pay the excess each time. So be sure you have the cash to cover more than one excess, just in case. **

What happens if you can’t afford to pay an excess after an accident?

The answer varies from insurer to insurer. They might offer you a payment plan or they might not start repairs or release your car from the panel beater (if it has been repaired) until you have paid the excess. This is why it’s important to choose an excess that you can afford to pay so that you’re not stuck without a car when you need it. All in all, it’s extremely important to choose an excess that you can afford to pay at a moment’s notice so that you can get back on the road ASAP.

For example:

If your car is stolen or irreparable, your excess will take the form of a reduction in your payout. Let’s say your 30.000,000 Frw car caught fire and you had a flat excess of 3.000,000 Frw you will be paid out 27.000000 Frw. If your car can be repaired, you will make an actual payment of your excess amount to the panel beater when you pick up your car after repairs.

If the accident was not my fault, do I still pay an excess?

Even if the accident was someone else’s fault you will still have to pay your excess, to make sure you get back on the road ASAP. However, the good news is that even if you have to wait a bit, you will get your excess back if your insurer makes a successful recovery from the Insurer of the one who caused the accident, so your loss can only be temporary. Heads-up, making the recovery can take a couple of months as it usually involves lawyers, court cases, etc.

Here is what you need to know about Motor Insurance Excess in Rwanda;

The Rwandan motor Insurance landscape in Rwanda is a different one because it is highly regulated and the vehicle insurance rates are uniform across the insurance market. What this implies is that terms and conditions considered while fixing excess amounts are also similarly fixed.

The Vehicle insurance Excess is only applicable on comprehensively covered vehicles to cover against vehicle damages, fire and theft risks. The third party liabilities are unlimited. This means that there is no excess or limit applied to damages caused to other people (Persons initially not included in the insurance agreement) and their properties.

The mandatory excess percentage on material damage (Own damage) is 5% of the claim amount, whereas the excess percentage for theft, fire and write-off (Total loss) is 2.5% of the claim amount.

Below is a list of mandatory minimum flat amount excess that is non waivable;

Motorcycles; 100.000 Frw Saloon cars (Sedan or Voiture); 150.000 Frw SUVs and Pick-ups; 200.000 Frw Minibusses, Buses, Private service vehicles (PSV), School buses and special vehicles; 500.000 Frw

Trucks,Lorries, Trailers and Tractors; 850.000 Frw The waiver of excess (Rachat Franchise) is only authorized for Government owned vehicles. However, there are special conditions applied such as premium increases and more.