What is an Insurance Excess?

The excess is the amount of a claim you pay and has two affects on your insurance

Understanding how an insurance excess works is important for you to know before you sign on the dotted line to take out any policy.

Many insurance policies come with compulsory or voluntary excess.

The excess is the amount of a claim you pay and has two affects on your insurance:

The cost of premiums is kept down because insurance companies impose excesses to discourage people making small claims on their policies.

This means their administration pipeline is not choked with paperwork for minor claims, so the cost of dealing with claim is removed and not passed on to customers as an increased premium

Paying an excess reduces the cost of insurance because the policyholder is taking on some of the insurance company’s risk.

Customers can choose the level of their excess with many insurance policies. Generally, the higher an excess a customer is willing to pay, the lower the premium charged by the insurance company.

An excess most commonly comes with insurance for cars, pets, travel, buildings and contents.

It is important to remember that an excess applies per year and not for every claim, so if you have a £100 excess on your car insurance and have two claims for accidents in a year, you only pay the excess once.

When you get a quote you can choose to increase your excess to reduce your monthly payments.

If the excess is compulsory, you have no option and must pay the excess if you make a claim on the policy.

If the excess is voluntary, you can decide whether to pay the full insurance cost for the year or to reduce the premium by offering to pay an excess.

If your policy has a compulsory and a voluntary excess combined, then make sure the two don’t add up to more than you can afford to pay.

For example, if you have a £200 compulsory excess and opt for a £250 voluntary excess to keep your premium down, then the combined excess you will have to pay in the event of an accident is £450.

This means if the claim is for £750, the insurance company will only pay out £300 and you will have to fork out the rest from your own pocket

The excess amount varies from company to company and for different types of policy. Generally, expect to pay between £50 and £500 for an excess.

Insurance companies always include details of excess amount on your policy schedule.

An excess can also apply to certain types of cover within a policy.

For instance, drivers commonly have windscreen damage excess, accident damage excess and a fire/theft excess of different amounts on a single car insurance policy.

Some companies offer to waive no-fault damage accidents for drivers, so it’s important to check the wording of your policy to make sure you know when and how much of an excess you might have to pay.

What is an Insurance Excess?

The excess is the amount of a claim you pay and has two affects on your insurance

Many insurance policies come with compulsory or voluntary excess.

An excess most commonly comes with insurance for cars, pets, travel, buildings and contents.

An excess can also apply to certain types of cover within a policy.

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