When applying for any type of insurance policy, the premium price of your insurance is typically accompanied by an ‘excess’ cost. Insurance providers use excess charges as a way to deter people from making claims for minor repairs.
For instance, relying on car insurance for every small bump in the road can increase the cost of car insurance for everybody. This is to prevent people from thinking that having insurance will guarantee you financial protection from damages you may incur – be it on the road or property.
Excess insurance or excess waiver insurance is given as an option for those who want to protect themselves from excess charges in the event your car is damaged or stolen. This is especially popular in car hire policies as it involves high-risk drivers.
What is Excess and Why Do Insurance Companies Have Them?
An excess is the agreed amount you need to pay towards a claim on an insurance policy. You can also refer to it as a ‘deductible,’ wherein you cover the initial amount of the excess while the insurance provider pays for the remaining expenses.
For instance, if you’re planning to make a claim for stolen goods, you will be given an excess of £100. The claim you make is £400, so your provider will keep the excess you paid and give you £300.
Other than preventing people from making petty claims, the excess is imposed to hold people accountable for a small part of the loss.
Excess insurance works in conjunction with your other insurance policies. It aims to pay for your excess in the unfortunate event of an accident, though the amount you will cover depends on the agreed terms between you and the insurer. With that in mind, there are two kinds of excess insurance:
1. Compulsory Excess
This is an excess that is decided by your insurer and applies to your policy no matter what. For instance, young and inexperienced drivers tend to have higher costs of compulsory excess compared to seasoned drivers. This is because the former falls into a higher-risk category, which means that extra excess must be added.
2. Voluntary Excess
Voluntary excess, on the other hand, is a popular choice as it aims to decrease the cost of your premiums so long as you claim for a higher voluntary excess. Think of it was a reward for cutting down the expenses insurance providers are liable to payout. While you are able to choose the amount of voluntary excess, you can no longer negotiate or take out a voluntary excess once you make the claim.
Many people find insurance policies more troubling than it is of help on the first go. Digging deeper, you’ll see how it is essential for the sake of your financial security. Repair costs can sometimes be overwhelming. They will be more frequent if you use your car often as well. Being insured ensures a reduction of the repair costs, which is a favourable scenario considering the financial trauma before getting your car back in an optimal condition.
If you’re looking for an accident management company to help you with your situation, get in touch with us today to see how we can help!