![[Car Insurance] Car Insurance Compensation Essentials | How to calculate the deductible/deductible? When and how?](assets/blog/Car-Insurance-Deductible-820x45.webp "[Car Insurance] Car Insurance Compensation Essentials | How to calculate the deductible/deductible? When and how?")
[Car Insurance] Car Insurance Compensation Essentials | How to calculate the deductible/deductible? When and how?
Author:
Kwiksure Team
Created On:
2025-05-29
Edited On:
2025-06-23
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Buying car insurance is one of the things that every car owner must do. But what does the ‘excess’ (also known as the excess) on the car insurance policy mean? What impact does the excess have when making a claim? How is the excess calculated? This time, Kwiksure will give you an in-depth analysis of the role, calculation and payment methods of the deductible.
What Is a Deductible?
The excess on a car insurance policy is a pre-set amount in the policy that the policyholder is required to pay to the insurance company when a claim is made. For example, if the total claim amount is $15,000 and the policy has a deductible of $5,000, the policyholder will have to pay the $5,000 deductible and the remaining $10,000 will be reimbursed by the insurance company.
Why is the Deductible Different For Everyone?
The amount of the deductible may vary depending on the insurance company. The excess varies between different insurance companies and policies. Some policies may have very high excesses, while others may have no excess at all.Generally, the higher the deductible, the lower the premium., and vice versa. Therefore, when car owners consider different car insurance plans, in addition to looking at the level of premiums, the deductible is also an important consideration.
There is no minimum amount required for property damage under Hong Kong law, but most local insurance companies will provide third party property protection up to $2,000,000. There are usually several deductibles attached to a car insurance policy, which take effect depending on the circumstances or conditions when the insured files a claim.
How to Calculate Car Insurance Deductible?
There are usually two ways to calculate the deductible.A specific amount or a specific percentage of the compensation amount。
Let us use the above example again. Assuming the total claim amount is $15,000 and the policy has a $5,000 excess, the policyholder will have to pay $5,000 as a deductible and the remaining $10,000 will be paid by the insurance company. This is a deductible of a specific amount.
If the excess is calculated based on a specific percentage of the compensation amount, assuming the excess is 1% of the compensation amount, the car owner needs to pay 1% of $15,000, or $150, and the remainder will be paid by the insurance company. Some insurance companies will specify both calculation methods, for example, stating that the excess is 1% of the claim amount or $5,000, whichever is higher.
7 Common Deductibles with Comprehensive Car Insurance
|
Deductible Type |
Details |
|
General/Own Damage |
Excess that is applicable to any claim. When the insured vehicle is damaged, the driver will have to pay this deductible before making a claim. |
|
Young Driver |
If the insured driver or the unnamed driver is under the age of 25 at the time of the claim, this deductible must be paid first. |
|
Inexperienced Driver |
Drivers with less than 2 years of driving experience (that is, their driving license is less than 2 years old) will have to pay this deductible first when they make a claim. |
|
Unnamed Driver |
This deductible must first be paid when an unnamed driver on the insured vehicle’s policy makes a claim. |
|
Parking |
If the insured vehicle is left unattended while parked, this deductible must be paid first for any claim. |
|
Third-party Property Damage |
When the insured or an unnamed driver causes third-party property damage or loss due to personal negligence, this deductible must be paid before a claim can be made. |
|
Theft |
When the insured vehicle is stolen, the driver must first pay this deductible when making a claim. |
4 Common Deductibles with Third-party Auto Insurance
|
Deductible Type |
Details |
|
Young Driver |
When an insured driver or unnamed driver under the age of 25 makes a claim, they must first pay this deductible. |
|
Inexperienced Driver |
When a driver with less than 2 years of driving experience (i.e. one who has held a driver's license for less than 2 years) makes a claim, they must first pay this deductible. |
|
Unnamed Driver |
When an unnamed driver on the insured vehicle's policy makes a claim, they must first pay this deductible. |
|
Third-Party Property Damage |
When the insured or an unnamed driver causes damage to a third party's property due to personal negligence, they must first pay this deductible when making a claim. |
When Will the Deductible be Paid?
No matter you purchase full coverage or triple coverage, you need to pay the excess to the insurance company before making a claim.
When Will the Full Insurance Deductible be Paid?
Generally speaking, if your vehicle is damaged and you have purchased comprehensive insurance,You can first go to the repair center for a quote and submit the quote together with the exception report to the insurance company. The insurance company will then arrange to assess the cost of repairing the vehicle, such as by appointing a notary public to adjust the charges. Once the cost of repairs is determined, the insurance company will ask the insured to pay the deductible. Generally speaking, the deductible is paid by cheque or bank transfer, after which the insurance company will issue a 'work permit' to start the repair process.
When the court rules that the other driver caused the accident, he is convicted of careless or dangerous driving. Your insurance company will start to recover the losses (including the repair costs paid earlier) from the other party or its insurance company, and will also recover the excess you paid. It usually takes months or even years to successfully recover all the money, depending on how quickly the other party's insurance company handles the matter.
When Will the Three-guarantee Deduction be Due?
After an accident occurs, you must notify the insurance company in writing, which means filling out an accident report and other relevant documents, and then wait for the legal process to be completed (which may take several months or even years). If we are eventually convicted of careless driving, the insurance company will have a chance to receive recovery documents from the third party and will charge you the third party insurance deductible, usually in the form of a check or bank transfer. Once the deductible is received, the insurance company will proceed with the third party’s claim.
Deductibles can be added up!
It must be noted thatThe deductible of car insurance can be calculated in a cumulative manner.. Assume that an auto insurance policy sets the following deductibles:
|
Deductible Calculation Method |
|
|
Generally |
$5,000 |
|
Young driver |
$5,000 |
|
Inexperienced drivers |
$5,000 |
|
Anonymous driver |
$5,000 |
|
Total Excess / Deductible |
$20,000 |
Suppose the 18-year-old son of the car owner (the insured) has just obtained his driver’s license and is involved in a traffic accident while driving the insured vehicle, but he is not the named driver on the policy. If the insured wishes to make a claim for this accident, he or she will first have to pay the above four deductibles, totaling $20,000. In addition to the 'normal' excess, in this case, the insured's son was a 'young', 'inexperienced' and 'unnamed' driver at the time of the accident. Therefore, the four deductibles also apply to this claim case.
Will Insurance Cover These Four Special Situations?
Frequently asked questions
What is a deductible?
The 'excess' or 'deductible' is a pre-set amount in the insurance policy. When making a claim, the policyholder must pay this amount first, and the remaining compensation will be handled by the insurance company.
How does the excess affect premiums?
Generally, the higher the deductible, the cheaper the premium. Conversely, a lower deductible means a higher premium. Therefore, when choosing insurance, it is necessary to weigh the balance between the deductible and the premium.
When do I need to pay my excess?
Whether it is full or triple insurance, the insurance company will usually ask for the excess to be paid after the accident is reported and the claim is submitted. Payment is usually made by cheque or bank transfer.
