{"id":3419,"date":"2022-02-13T14:42:00","date_gmt":"2022-02-13T14:42:00","guid":{"rendered":"http:\/\/www.policybee.co.uk\/blog\/?p=3419"},"modified":"2025-01-31T13:20:58","modified_gmt":"2025-01-31T13:20:58","slug":"what-is-an-excess","status":"publish","type":"post","link":"https:\/\/www.policybee.co.uk\/blog\/what-is-an-excess","title":{"rendered":"What’s an insurance excess?"},"content":{"rendered":"\n

<\/p>\n\n\n

\n
\"An<\/figure>\n<\/div>\n\n\n

Sometimes called a \u2018deductible<\/a>\u2019 (although strictly speaking a deductible isn’t the same thing), an insurance excess is the amount you pay towards the value of a claim.<\/p>\n\n\n\n

It’s called an excess because the insurer is liable for payments in excess of<\/em> the first part of a claim and up to the limit of cover.<\/p>\n\n\n\n

Here\u2019s a quick example:<\/p>\n\n\n\n

Your office is flooded and you claim for damages totalling \u00a32,000. Your policy excess is \u00a3250, which you pay, and your insurer settles the remaining \u00a31,750. Straightforward enough.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Why does your insurance excess matter?<\/h2>\n\n\n\n

Pretty much all insurance policies have an excess. Unless, of course, your insurer deems the risk of a claim or its likely value low enough to do without one. Employers\u2019 liability insurance<\/a> is the one business insurance policy that never has an excess.<\/p>\n\n\n\n

Although in some cases you can choose your excess, the amount is more usually set by the insurer. It\u2019s not an arbitrary figure though \u2013 insurers take into account things like the nature of the risk or the historical frequency and value of claims covered by that type of insurance.<\/p>\n\n\n\n

For example, a portable equipment policy<\/a> (for laptops etc) might have a relatively high excess \u2013 say \u00a3250 or \u00a3500. Things like mobile phones and laptops get lost, damaged and stolen all the time. So the excess is set deliberately high to deter a high number of low-value claims.<\/p>\n\n\n\n

Although that sounds unfair, it does actually make sense.<\/p>\n\n\n\n

Because aside from the insurer\u2019s losses from making settlements, claims cost money to process. And the more claims there are, the more the insurer loses. These losses have to be recouped from somewhere and the inevitable outcome would be cost increases for all policyholders, regardless of claims history.<\/p>\n\n\n\n

So, to avoid this happening and to keep prices fair, insurers set the excess at a level high enough to make policyholders think twice before regularly claiming for low values.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Higher or lower?<\/h2>\n\n\n\n

If you\u2019re shopping around for insurance you\u2019ll probably be familiar with the relationship between the excess and the premium.<\/p>\n\n\n\n

In simple terms, the higher the excess, the lower the premium (and vice versa). If you\u2019re willing to pay more towards a claim, your insurer will (usually) reduce the premium.<\/p>\n\n\n\n

If you\u2019re unlikely to claim on your insurance, it\u2019s probably better to have a higher excess. It\u2019s a small risk but it means you\u2019ll pay a lower premium in the short-term. Just bear in mind that you\u2019ll have to shell out more if you do make a claim.<\/p>\n\n\n\n

<\/p>\n\n\n\n

The professional indemnity insurance excess difference<\/h2>\n\n\n\n

What you might not be aware of is how the excess applies to professional indemnity insurance<\/a> claims.<\/p>\n\n\n\n

Because professional indemnity claims usually involve complicated allegations of negligence, your insurer has to use the expertise of a legal team to defend you \u2013 usually their own.<\/p>\n\n\n\n

And because a professional indemnity policy can be triggered solely by an allegation of negligence (and these often go nowhere), claims are frequently closed off without the insurer having to pay anything else.<\/p>\n\n\n\n

Now for the good news. If the only costs to your insurer are their own legal costs, you don\u2019t pay a thing. The excess usually only applies if you\u2019re found liable and your insurer has to pay your client compensation.<\/p>\n\n\n\n

But even if you do have to pay the excess, it\u2019s still going to be a much lower figure than you\u2019d pay if you didn\u2019t have insurance. In our experience, you’d be looking at a bill for many \u00a3thousands rather than just a few \u00a3hundred.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Need our help?<\/h2>\n\n\n\n

For more explanations what’s what in the world of insurance terminology, check out this handy insurance glossary<\/a>. Or give us a call if you’d rather hear it straight from the horse’s mouth. Our number’s 0345 222 5391<\/strong>. <\/p>\n\n\n\n

Image used under license from Shutterstock.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Sometimes called a \u2018deductible\u2019 (although strictly speaking a deductible isn’t the same thing), an insurance excess is the amount you pay towards the value of a claim. It’s called an excess because the insurer is liable for payments in excess … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[129],"tags":[45,137,171,299],"class_list":["post-3419","post","type-post","status-publish","format-standard","hentry","category-professional-indemnity-insurance","tag-claims-2","tag-insurance-explained","tag-negligence","tag-professional-indemnity-insurance"],"acf":[],"yoast_head":"\r\nWhat's an insurance excess?<\/title>\r\n<meta name=\"description\" content=\"An insurance excess is the amount you pay towards a claim. Usually, the higher your excess, the lower your premium. 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