Excess
An excess is your contribution towards any claim.
Let’s say you have a claim for accidental damage, and your accidental damage excess is £250. If the cost of the claim is £600 you will contribute the first £250 of the claim leaving your insurance company to pay the remaining £350 (£600 claim minus £250 (your excess) leaves £350 outstanding). It goes without saying that if you have a £250 excess and your claim is worth less than £250 then there is little point approaching your insurer as your costs would cover the total damage cost.
An excess is your contribution towards any claim.
Let’s say you have a claim for accidental damage, and your accidental damage excess is £250. If the cost of the claim is £600 you will contribute the first £250 of the claim leaving your insurance company to pay the remaining £350 (£600 claim minus £250 (your excess) leaves £350 outstanding). It goes without saying that if you have a £250 excess and your claim is worth less than £250 then there is little point approaching your insurer as your costs would cover the total damage cost.
Voluntary excesses
When you take out a policy with an insurance company you will have the opportunity to contribute towards any claim. While you may think this is identical to a compulsory excess, a voluntary excess is the amount you agree to contribute on top of your compulsory excess. Let’s say you choose to have a £250 voluntary excess on your policy, the policy itself may already have a £200 compulsory excess so dependant on what type of claim you have, you may find your total excess payable is £450.
The benefit of a voluntary excess is that generally the more you agree to pay towards a potential claim the cheaper the premium will be.
When you take out a policy with an insurance company you will have the opportunity to contribute towards any claim. While you may think this is identical to a compulsory excess, a voluntary excess is the amount you agree to contribute on top of your compulsory excess. Let’s say you choose to have a £250 voluntary excess on your policy, the policy itself may already have a £200 compulsory excess so dependant on what type of claim you have, you may find your total excess payable is £450.
The benefit of a voluntary excess is that generally the more you agree to pay towards a potential claim the cheaper the premium will be.
Compulsory excess
In addition to any voluntary excess you may have selected, you may be asked to pay a compulsory excess towards any claims on your policy, though there are some policies which may have nil compulsory excess. Compulsory excesses will more than likely be found on policies where there is a young driver or a high value vehicle.
Although you may see an excess as a downside, if you consider that by contributing towards a claim it allows the insurer to lower the costs of their premiums. By minimising the potential for lots of smaller claims, this reduces the workload of the insurer in both employee and administration, allowing the insurer to save money which helps keep premiums low.
In addition to any voluntary excess you may have selected, you may be asked to pay a compulsory excess towards any claims on your policy, though there are some policies which may have nil compulsory excess. Compulsory excesses will more than likely be found on policies where there is a young driver or a high value vehicle.
Although you may see an excess as a downside, if you consider that by contributing towards a claim it allows the insurer to lower the costs of their premiums. By minimising the potential for lots of smaller claims, this reduces the workload of the insurer in both employee and administration, allowing the insurer to save money which helps keep premiums low.