The excess on insurance policies is something that is frequently unpopular with policyholders and in many cases, also misunderstood.
In fact, it arises from the insurance industry’s efforts to keep down the cost of their policies to their customers by asking the policyholders to make a contribution towards the cost of any future claims. It is, therefore, best seen as something that the industry is trying to do to help customers rather than a way of trying to avoid making fair settlements in the event of a successful claim.
As the excess is found on a number of different policies, the total financial exposure for some people may be considerable. Something called multi excess insurance exists to try and help contain these financial risks whilst at the same time delivering simplified administration and efficiency:
- if you look at some of the major policies that help to protect your financial interests, examples might include household cover, motor insurance, travel cover* and so on, you may find that they will all contain a specified amount of mandatory excess;
- it is possible to take out a separate type of policy, which will reimburse you for any costs you are forced to incur arising from the excess on one of your main policies;
- however, it may be a little tedious and not very cost-effective to take out a separate excess insurance policy for each of your main policies;
- that is why some excess insurance providers have come up with the innovative idea of offering a single policy providing excess reimbursement cover but for a number of your individual main policies;
- for example, for a premium of only £100 you may be able to purchase up to £1000 of excess cover protecting you across a range of your main policies including car, house, contents, pet and travel insurance;
- as stated above, not only might that be more cost-effective than purchasing a number of individual excess protection policies but dealing with only one provider and one policy may make your life considerably easier from an administrative point of view;
- of course, all insurance comes with terms and conditions and these should be read carefully to make sure they are understood. That applies to excess insurance just like any other form of cover;
- one of the main conditions to bear in mind with such protection is that typically it will only reimburse you in situations where you have had a successful claim on your master policy which was higher than the specified excess on the same policy document. In other words, if you claimed for £500 against a car policy which had an excess of £750, you would typically receive nothing from your main policy and you would not be eligible to claim on your excess cover.
Excess protection insurance might give you that little added peace of mind that your financial affairs are better protected – and that might be worth its weight in gold in terms of allowing you a good night’s sleep!
