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Policy excess
The excess on a policy is the amount that you have to pay towards any claim that you make.
For example, if you claim £500 for a damaged carpet and your excess is £50 the Insurer will pay £450 for the claim, whilst you stand the fifty pound excess.
There are two types of excess:
• Compulsory excess
This is imposed by the insurance companies on various types of claims, most notably subsidence problems where most Insurers impose a £1000 excess. Be careful to note any other compulsory excess before purchasing the policy.
• Voluntary excess
This excess is agreed by you to receive a discount on the premium. Most policyholders agree to a £50 or £100 voluntary excess to reduce the premium.
Comment
It is unlikely that you would claim off your policy for a small amount to prevent your premium increasing at renewal, you might as well have a small excess and enjoy the benefit of a reduction in premium.
The average household has a £100 excess on buildings insurance and a £50 excess on contents. |
