Looking at insurance, and heard the word excess being used, but not quite sure what excess is, or what the different types of excess are? Don’t worry, we’ll run through it all.
Unfortunately, even getting rightful compensation can cost you – the excess is how much you’ll pay out yourself, if you ever have a successful claim on your insurance (the insurance company paying out).
And to make things complicated, there’s two types of excess, voluntary excess and compulsory excess, and together make up the total excess you’ll pay.
Let’s run through voluntary excess first, and then the finer details on insurance excess.
By the way, sometimes you might get the excess returned to you if an accident wasn’t your fault (e.g. a car accident). Your insurer will get this from the other person’s insurance.
Voluntary excess is the amount of excess set by you, rather than compulsory excess, which is set by the insurer.
So, that means, you decide exactly how much excess to have on your insurance policy (the specifics of the insurance), normally from a cost range that the insurer decides.
By changing the excess you can adjust how much the insurance premium is as well (how much you’ll pay for the insurance).
How? with a higher voluntary excess, you’ll likely pay lower for the insurance. With a lower voluntary excess, you’ll likely pay more for your insurance. Your voluntary excess means you can get the balance just right for you, by deciding how much excess you’d like (we’ll show you how to find the right insurance deal for you below).
Compulsory excess is how much the insurer sets as an excess, so you can’t change this, you can only adjust the voluntary excess which is added on top of this.
The compulsory excess can be completely different for each type of insurance (e.g. home insurance vs car insurance) and the type of claim. For instance, with travel insurance, you might have one excess figure for your items to be stolen (for instance £50), but another excess figure if you want to make a claim for personal liability cover (legal costs of an accident), which might be £250.
It can also change depending on who you are, and how likely you are to make a claim. For instance, insurance companies might have a higher excess for young drivers, and a lower excess for those with lots of driving experience.
Travel insurance providers have an excess in place for two main reasons. The first is to deter fraud – making a claim will cost you a bit of cash yourself. And, the second is to stop you claiming for small costs, which the insurance company would prefer not to deal with, as it costs them money in things like admin and staff, to handle claims.
You can also get no-excess insurance, where there is simply, no insurance excess. This can be a great option, but typically have much higher insurance premiums (the cost of the insurance).
Although it’s called no-excess insurance, there can still be an excess to pay if you are claiming for the more expensive things such as personal liability cover, which is the legal costs if there’s an accident and someone else was injured, or their property was damaged (e.g. a hotel room).
With some insurance providers, you can also get an insurance excess waiver, or sometimes called excess insurance. This is where you pay a fee when you take out the insurance, which will then ‘waive’ the excess on the insurance policy, if you ever need to make a claim. So, you won’t pay any excess when you make a claim.
Sounds pretty good right? They’re quite popular especially with car hire insurance, and travel insurance for bigger trips. However, it does cost extra, so it’s worth a bit of time considering if it’s truly worth it.
Although the excess can be complicated, finding the right insurance deal for you can be super easy – whichever type of insurance you’re looking for (e.g. car insurance, or travel insurance).
It can take just 10 minutes if you use an insurance comparison site, such as Confused.com¹. All you need to do is fill out a few details about yourself and the insurance you’re looking for (such as the holiday you’re heading on, or the car you drive). They’ll then compare a range of insurance companies to find the best deal suited for you.
Then, all you need to do is pick the best one for you from the shortlist (normally the cheapest). After that, you’ll be taken to the insurers website, with your details all pre-filled (hopefully), have a check over and then buy the insurance. You’ll normally be covered immediately.
Nuts About Money tip: if you’re buying travel insurance, we’ve got a specific guide on how to get travel insurance.
There we have it. Voluntary excess and compulsory excess make up the total excess figure you might pay on your insurance if you make a successful claim. The voluntary excess is set by you and is adjustable (within a range set by the insurer), and compulsory excess is set by the insurer, which you can’t change.
Excess is very common on most insurance types, e.g. car insurance and home insurance. And you’ll either have to pay the excess yourself when you make a claim, or if you’re due money back directly (as compensation), it will normally be deducted from the amount you’ll get.
And that’s it. We hope that’s made things a bit more understandable.
Head over to Confused.com to find the best deal for you. They search almost every deal out there.Visit Confused.com¹Visit Confused.com¹