In the land of insurance, there’s a little something called excess. It’s not as glamorous as a crown or sceptre, but it’s pretty important when it comes to protecting your royal assets. So, what exactly is an excess, and why should you even care about it?
Let’s break it down in a way that even a royal jester would understand.
Let’s talk about what an insurance excess is
For far too many people, the first time they really understand what an excess is, is when they submit a claim. Then all of a sudden, there’s a request to cough up an amount so that the claim can proceed. It’s around that time when the memory starts to come back (and a bit of panic). Suddenly you remember that when you got your quote, there was another number. The excess amount.
Let’s talk about that for a second.
The excess is your personal contribution when you file an insurance claim. It’s the amount you agreed to pay upfront before your insurer steps in to cover the rest. How it works is that if your car is involved in an incident and you need to claim, you’ll pay the excess amount first and once this box has been checked, your claim will move forward.
The reason an insurance excess exists
It’s a common thought that the excess is just another way to make money off the poor, but in our kingdom, that’s completely not the case. The excess exists to keep the insurance system fair and affordable. You see, without it, people might be tempted to claim for every tiny nick and scratch, turning insurers into their very own royal piggy banks. In reality, the excess ensures that you have a bit of skin in the game, which encourages you to be more mindful of your insured valuables and only claim when it’s necessary.
Most importantly, the existence of the excess also helps to keep premiums lower for everyone in the kingdom.
How the excess affects your coffers
Most insurers (including us) give you the freedom to increase your basic excess amount to lower your premiums. We make super sure to remind you that this can be a clever strategy to make your cover more affordable, but you’ll need to be able to pay this excess if you claim. If disaster strikes and you haven’t squirrelled away enough in your own royal treasury, that higher excess could leave you feeling more like a pauper than a prince.
It’s all about striking a balance that works for your finances and your risk tolerance and choosing an excess amount that lowers your premium just enough, while staying affordable.
Another key factor is that you could get your excess back, bringing your budget back to life. During the claims process, our consultants will do their best to recover this money for you, but it’s not a given and depends on a variety of circumstances.
Types of excesses
Here’s a royal roll call of the main excess types you might encounter:
- The basic excess: This amount is set by your insurer and applies to most claims. Paying it is non-negotiable when a claim has been successfull.
- The voluntary excess: With some insurers, you can choose to pay an additional amount to the standard excess. This will bring your premium down, but just be sure you’re ready to pony up if you need to make a claim.
- The age excess: Drivers under the age of 25 are considered less experienced and so to compensate with this added risk, a higher excess is applied.
- The additional excesses: Sometimes, your insurer might add on an additional excess for specific risks, such as when your car is involved in an accident and the driver is under 25 years old AND isn’t listed on your policy.
Judging the villains from the heroes
You may be wondering, if the excess actually helps to keep things affordable, how then can there be a villain in this story? Well, depending on how you understand these excesses and what you choose, this amount could be a hero knocking premiums down and keeping the industry affordable… Or a villain, pillaging your finances.
Let’s look at 1 of the additional excesses to make our point. Inexperienced or younger drivers often have to pay higher excess amounts than their experienced and older counterparts. This is fairly common, so much so that younger drivers are grouped under a high-risk category and usually have higher excess amounts (and monthly payments). It makes sense, but if you’re still sipping on the cup of youth, it could feel somewhat villainous.
A lot of the time, it comes down to understanding the excess that applies to your policy, like why it’s there, how much it is, when it has to be paid, and that sort of thing.
The royal moral of the story
Like with most things in your insurance policy, it’s important to read the fine print and understand what you’re agreeing to. Whether it’s a basic excess, exclusion, or something extra, a detail like your excess can have an enormous impact on your budget.
We do our level best to make sure that you know the ins and outs of your policy with us, and if you want our royal touch in your life, then WhatsApp us on 0860 50 50 50 or click here to visit our website to see for yourself.
