Excess Insurance

Insurance excess is the amount of money you have to pay if you make a claim on your insurance policy. For example, if you have an excess of £100 and the claim you are making is for £600, then you would pay the first £100 and the insurer would pay the remaining £500. Usually, the higher your excess, the less you pay for your insurance policy. In certain circumstances, the excess is payable even if the claim is not your fault (although the cost can often be reclaimed from the at-fault driver on car insurance policies).

Excess insurance is an extra level of protection which covers your excess. If, for whatever reason, you need to make a claim on your current insurance policy, the excess insurance policy will ensure your excess is paid back to you (up to a pre-agreed limit).

By and large most customers will find that the higher you are willing to set your excess the lower the premium on your policy will be.

How Excess Insurance Works

There are two main kinds of policies: one which covers the excess on a single underlying policy (e.g. a car excess insurance policy) and one which covers the excesses across a range of underlying policies all in one go. The second type is sometimes called a “lifestyle” excess policy, and will generally cover excesses on your car, home, travel, pet and medical insurance policies all in one go.

The way it works is that you buy the excess cover either at the same time as your underlying policy, or at some other point in the year. If you claim on your underlying policy, you pay your excess as normal, and then use your excess insurance policy to reclaim the excess you have paid, up to a pre-agreed limit.

You decide on this limit when you buy the excess insurance - policies tend to offer limits from £250 for the year to £750 or more. The higher the limit, the more expensive the excess insurance policy, but the more excesses you will be able to claim during the year of the excess policy. For single policy excess insurance products, a higher limit will allow you to reclaim excesses on multiple claims during the year until you reach the limit; on lifestyle policies, a higher limit will allow you to reclaim excesses you pay on all qualifying underlying policies until your reach the limit.

When You Might Need Excess Cover

Excess cover could be ideal for you if you have a high excess on one or more of your underlying policies, as it allows you to pay a small amount to cover yourself against the cost of the excess in the event of a claim.
It could also be very useful if you pay a lot for your insurance and would like to take a higher excess to reduce your premium, but don't want the risk of the cost of the excess in the event of a claim.

Excess Insurance Conditions

Excess insurance policies are fairly simple, but you should still think carefully about the limit you need for the year. Also, for lifestyle policies, they generally only cover underlying policies in the same policyholder's name.