Our Guide to Insurance Excesses.

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Here you’ll learn the basics and beyond of insurance excess, from policy excess to excess protection.

Main Points:

  • Policy excesses are the amount you must pay towards a claim. 
  • Your insurer will cover the rest, excluding the excess. 
  • Compulsory excesses are fixed by your insurer.  
  • Voluntary excesses are an amount that you choose to pay on top of the compulsory. 
  • When choosing a higher or lower excess, consider your budget.

Some of the most common questions regarding insurance are about excess. Don’t worry, we’re here to demystify it completely, so if you’re confused between voluntary and compulsory excess, or you’ve heard it might make your premium cheaper, this guide is for you.

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What is a policy excess?

In insurance, the policy excess is the amount of money you must pay as the policyholder towards a claim before your insurer covers the remaining costs.

This means that the insurer and you, as the policyholder, bear a portion of the risk. However, your insurer will cover the expenses that exceed the excess amount. 

Can I get excess on any type of insurance?

An excess can be applied to various types of insurance policies, such as car, home, and travel insurance 

The majority of policies, such as road-risk cover and car insurance, have compulsory excess. Voluntary excesses are a feature that enables you to choose the amount of excess you’re willing to pay on top of your compulsory excess.  

However, not all insurance policies have an excess, and the specific terms and conditions may vary between policies and insurers.

What happens if your insurance policy has an excess of £500?

Essentially, the excess represents the amount you are responsible for before your insurance kicks in to cover the remaining costs. 

For example, if your van insurance policy has an excess of £500, it means that in the event of a claim, you will need to pay the first £500 of the costs yourself. 

The insurance company will only cover expenses exceeding this £500 threshold. 

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What is the difference between compulsory and voluntary excess?

When it comes to excess, you will often hear it being called ‘voluntary’ and ‘compulsory’. 

Compulsory excess is a sum fixed by your insurer, while voluntary excess is an additional amount that you choose to pay on top of the policy excess. 

Both are amounts you pay out of your own pocket in the event of a claim. A higher voluntary excess can reduce your insurance premiums, but it means you’ll have a higher upfront cost if you make a claim. 

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How is compulsory insurance excess calculated?

Different types of insurance policies, such as car insurance, home insurance, or travel insurance, have varying excess amounts. Some policies may even have differing excess amounts for different types of claims.

How excess is calculated and applied can vary depending on the type of insurance and your specific policy terms. 

For example, car insurance policies often have a compulsory excess set by insurers which is calculated based on factors such as the type of coverage you have, the age of the driver, and the make and model of the car. While a home insurance  policy could have a fixed amount or a percentage of the claim value as its excess.

It’s essential to have a clear understanding of your excess obligations to avoid surprises when you need to make a claim. To know the exact details of how your compulsory excess is calculated and applied to your specific insurance policy, you should carefully review your policy documents. 

Is it better to have high or low excess?

There’s no straightforward answer on whether a lower or higher excess is the right choice for you. It all depends on your financial circumstances and what works for you. 

While a higher excess can reduce your premium, the amount you’ll be required to pay in case of a claim will be elevated. 

This means that the savings you make on your premium could easily then end up being spent on paying the higher excess if you claim.

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What is excess protection?

Excess protection is an insurance policy that covers the cost of the excess on another insurance, such as a car or home insurance policy. 

It helps you avoid the financial burden of paying the excess when you make a claim, potentially saving you money in case of an insured event.

Is excess protection insurance worth it?

Excess protection can be worth it if you want to avoid the financial burden of paying a high excess when making an insurance claim. 

However, its value depends on your specific circumstances, the cost of the excess, and the premium for the excess protection policy. 

You should carefully weigh the potential savings against the additional premium cost to determine if it’s a worthwhile investment for your situation.

What are the benefits of policy excess?

The benefits of a policy excess in insurance include:

  • Lower Premiums if the excess is higher, which can make monthly premiums more affordable.
  • With voluntary excess, you decide how much you’ll pay upfront in case of a claim.
  • Excess options allow you to tailor your insurance to your financial situation and risk tolerance.

However, it’s important to strike a balance, choosing an excess you can comfortably afford in case of a claim while enjoying the cost-saving benefits.

About the Author

David Bartels

Operations Assistant

David is our Operations Assistant. He’s been at One Sure Insurance for seven years, beginning his career here working as a Customer Advisor. As part of our operations team, he helps ensure everything runs smoothly behind the scenes at One Sure Insurance. David is a fountain of knowledge regarding customer care, the insurance industry, and our operations.