When I first started dealing with insurance, the term “excess” felt like some confusing jargon nobody really bothered to explain. You hear it thrown around all the time, but honestly, figuring out what it means isn’t exactly straightforward. In simple terms, insurance excess is the amount you agree to pay out of your own pocket when you make a claim. But here’s the thing—it gets a bit trickier once you realize there are two main kinds: voluntary and compulsory excess. So, I wanted to break down what insurance excess actually means, explain the differences between these two types, and share a few tips that might save you some cash or at least keep you from getting caught off guard. Sound good? Let’s get into it.
First up, an insurance excess (sometimes called a deductible) is the sum you have to cover yourself before your insurance company steps in to pay the rest of your claim.
Why does excess even exist? Well, it’s basically the insurer’s way of cutting down on lots of small claims that could bog them down, and nudging you to be more careful. From what I’ve seen, it’s a smart move for them when managing risk. For example, say your excess is £300 and you make a claim for £1,000. You’d cough up the first £300, and the insurance company would cover the remaining £700. It also keeps your premium costs in check since you’re sharing a bit of the risk yourself.
So, how much can your excess be? That really depends on the type of insurance and which company you go with. For example, excess on home insurance might be as low as £50, but with car insurance, it can easily be £1,000 or more. The exact figure varies based on the kind of claim, your specific policy, and how the insurer views your personal risk.
If you want to dig deeper, the UK’s Financial Conduct Authority (FCA) has some solid info on general insurance rules right here: https://www.fca.org.uk/consumers/general-insurance.
