What is insurance excess cover?
By Alan Boswell Group
Excess cover can help you recover all your costs after making an insurance claim. Here, we explain how it works, the type of policies it usually applies to, and how it could save you money in the long run.
What is an insurance excess?
Insurance excess is the amount of money you pay towards a claim – it’s usually deducted from any money your insurer pays out to you.
Excess applies to almost all types of insurance, including home, car, and landlord insurance. One of the few exceptions is life insurance where excess does not apply.
For example, your home insurance excess is £200 and you make a £700 claim for stolen items. If your claim is successful, your insurer will deduct the £200 excess from your total payout, giving you the remaining £500.The excess is typically made up of two parts:
Compulsory excess
This is an amount set by your insurer. The amount varies depending on the policy and what the chances of you making a claim are (based on the risk perceived by your insurer). Broadly, high risk, high value claims will lead to a higher excess.
For example, if you live in a severe flood risk area, you can expect your compulsory excess to be considerably higher compared to someone who doesn’t. Similarly, the excess on a subsidence claim also tends to be high – around £1,000, reflecting the complex nature of subsidence claims.
Voluntary excess
Voluntary excess is set by you when taking out your policy, but you’ll be expected to pay it along with the compulsory excess if you want to make a claim.
Setting a higher voluntary excess will normally equate to a premium discount.
What is excess protection insurance?
Excess protection insurance helps you recover the excess you’ve paid after making a claim. It’s also known as insurance excess cover or excess reimbursement insurance.
Excess protection is typically bought as part of a car, home, property or landlord insurance package. It isn’t usually available as a standalone policy.
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How does excess protection insurance work?
Excess protection applies to a specific policy – whether that’s for your car, your home, or a rental property. You can then choose the limit of your policy which is the maximum amount of money you can claim in total. Limits typically range from £300 up to £3,000.You’ll be able to make multiple claims for as long as the policy lasts (usually 12 months) as long as you stay within the limit set. So, if (for example) your limit was £2,000, you could make one claim for £500 and another for £1,500 in the same year.
When you make your initial insurance claim, you’ll need to pay the excess as agreed and set out in your policy. After that, you can then claim back the excess using your excess protection policy.
It’s also important to know that excess protection cover pays out regardless of fault, and regardless of whether or not your insurer can recover expenses from a third party.
Is it worth getting excess protection insurance?
In the event of a claim, excess protection can ultimately save you money as it should enable you to recover the excess on a claim. But not only that, excess protection can give you extra peace of mind. This can be especially true if the policy relates to something you don’t have much control over, such as a rental property. In this situation, excess protection for landlords can save you from losing money if you need to make a claim because tenants have damaged your property.
How much is excess protection insurance?
The cost of excess protection insurance is generally a lot lower than most excesses, so it’s also viewed as good value for money. For instance, at Alan Boswell Group, our landlord excess protection policies start from as little as £20 per year, per property.
What isn’t covered by excess protection?
Exclusions will vary depending on the specific terms set out by the insurer so it’s a good idea to read over your policy documents when you get them.
Generally, any claims where the total cost is less than your excess won’t be covered. You also won’t be covered for claims that happen before the policy starts.
Excess protection from Alan Boswell Group
Alan Boswell Group offers excess protection on a range of policies, including home, property, and landlord insurance in particular. For more information or to discuss how excess protection insurance might work for you, call us on 01603 216399 or send a message using our contact form.