An insurance excess is the first amount payable by the insured in the event of a claim. Many clients compare policies mainly by looking at the monthly premium. While the premium is important, the excess structure is just as important.
A lower premium may look attractive, but in some cases the “catch” is a much higher excess at claim stage. This is something many insureds overlook when comparing quotations.
The real question is not only: “What is my monthly premium?”
But also: “What will I need to pay if I claim?”
Different excesses may apply to different sections of your policy and to different types of claims. For example, your motor excess may differ from your household contents excess. A theft claim may have a different excess to an accident claim. Water damage, power surge or weather-related claims may also carry their own specific excesses.
In some cases, additional or penalty excesses may apply. These may include excesses for:
- Theft claims
- Weather damage
- Power surge claims
- Young drivers
- Non-regular drivers
- After-hours losses
- Specific vehicles, items or policy sections
It is also important to understand that more than one excess may apply to a single claim. For example, a standard basic excess may apply together with an additional excess for a young driver, non-regular driver or theft-related loss.
Excesses may be shown as a fixed amount, a percentage of the claim, or both. Some percentage-based excesses may also be subject to a minimum amount.
This means the amount payable by you at claim stage may be much higher than expected if you have not reviewed your policy schedule carefully. The safest approach is simple:
- Do not only compare premiums.
- Compare excesses too
- Ask questions before there is a claim.
Your policy schedule will usually show which excesses apply to your cover, but these can differ between insurers and policies.
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At SWL Financial Services, we help clients understand not only what they are covered for, but also what they may be responsible for paying when they claim. Contact us if you would like to review your excess structure and better understand how your policy will respond at claim stage.
This content is provided for general information purposes only and should not be considered financial advice. Please consult a qualified financial adviser before making financial decisions.
