If you’ve recently renewed your car or home insurance, you likely noticed that the "Basic Excess"—the amount you pay out of pocket during a claim—has climbed. In March 2026, many South Africans are seeing standard excesses on vehicle policies jump from R3,500 to R5,000, or even R7,500 for high-value items.
This isn't just a random price hike; it’s a calculated response by insurers to an increasingly expensive and volatile environment. Here is why the "price of claiming" has gone up.
1. The Parts Inflation Crisis
The single biggest driver of higher excesses is the cost of vehicle repairs. Even though your car depreciates (loses value) every year, the cost of the parts to fix it does the opposite.
- Imported Costs: Most car parts in South Africa are imported. With the Rand's ongoing sensitivity to global shocks in early 2026, the cost of a single headlight or bumper has risen by as much as 15% to 20% year-on-year.
- Complex Tech: Modern cars are packed with sensors, cameras, and LED tech. A "minor" bumper-basher that cost R10,000 to fix three years ago can now easily cost R40,000, as those sensors must be replaced and recalibrated. By raising the excess, insurers ensure that the policyholder takes on a slightly larger share of these ballooning small-claim costs.
2. Weeding Out "Nuisance" Claims
Insurers are currently facing a high volume of small, "frivolous" claims (like a cracked wing mirror or a small scratch). Processing a claim—regardless of the size—costs an insurance company thousands of Rands in administrative and legal fees.
- The Threshold Strategy: By increasing the basic excess to, say, R6,000, insurers effectively discourage people from claiming for repairs that cost R7,000.
- The Benefit: This keeps the insurer’s administrative costs down, which theoretically prevents your monthly premium from rising even faster.
3. The "Climate" Surcharge
2025 and early 2026 have seen an increase in "catastrophic" weather events in South Africa—severe hailstorms in Gauteng and flooding in the Western Cape.
- Reinsurance Pressure: South African insurers buy their own insurance from global "reinsurers." Because South Africa is now seen as a higher-risk region for weather events, these global companies have hiked their rates.
- Passing it on: Local insurers are passing these costs to consumers not just through premiums, but by increasing event-specific excesses. For example, many 2026 policies now have a specific, higher excess for "Hail Damage" compared to a standard accident.
4. Excess as a "Premium Lever"
In the current 2026 "affordability crisis," many consumers are struggling to pay their monthly premiums. Insurers are using higher excesses as a way to keep people insured.
- The Trade-off: Insurers will often offer you a "Zero Increase" on your monthly premium if you agree to double your excess.
- The Psychology: For many South Africans, paying an extra R200 a month feels harder than the possibility of paying an extra R3,000 once every five years if they have an accident.
5. New "Funder" Solutions
To combat the shock of higher excesses, 2026 has seen the rise of "Excess Funder" accounts. Some insurers now allow you to "save up" for your excess via your loyalty rewards or a small monthly add-on. For example, Discovery Insure allows members to use their "Vitality Drive" fuel rewards to fund their excess, effectively making the out-of-pocket cost R0 at the time of a claim if they have been driving well.
The Bottom Line
Higher excesses are a defensive move by insurers to stay profitable while repair costs skyrocket. When reviewing your policy this month, check if your "Voluntary Excess" is set too high—if you can't afford to pay R10,000 in an emergency, it might be worth paying a slightly higher monthly premium to bring that excess down to a manageable level.
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