What is an Excess in Insurance?

An excess is an extra payment contributed by a client towards an insurance claim for a car or home policy. Insurers typically have different types of excesses which are applied to specific situations. 

The purpose of a voluntary excess is to reduce a client’s monthly premium which can help save on insurance costs. It is important to point out, however, that in the event of an insurance claim, the client will be required to pay more towards the claim than they would if there was a basic excess involved. Most insurance companies market a voluntary excess to clients by claiming that it will increase savings, however this is only possible in if an insurance claim is never made. In the event of unexpected damage, customers may suddenly find themselves faced with an insurance bill which evaporates all of their hard-earned insurance premium savings.

How Does a Voluntary Excess Impact Your Costs?

Simply put, an insurance company can only reduce insurance premiums by shifting a portion of the risk back to the client. Voluntary Excesses are in addition to your standard excess, which means you will pay more in the event of a claim. This is essentially an agreement from the client to bear additional risk in return for a reduced premium. To understand this insurance product better, here are some of the most common types of excess:

Standard or Basic Excess

This usually refers to an amount the client agrees to contribute towards all potential claims. It may apply by itself or in conjunction with another excess.

Age Excess

When it comes to car insurance, this additional excess may apply if a driver is under a certain age. Insurers may also apply difference excess amounts for drivers over a specified age.

Inexperienced Driver Excess

This additional excess may apply if a driver is over a certain age but has held a license for less than a specified period.

Special or Additional Excess

An insurer may apply this kind of excess for special reasons, this may apply in the case of a flood or earthquake excess for a home. It may also apply for drivers with serious traffic incident histories.

Trusted Insurance Brokers in Queensland

As reliable, transparent insurance brokers with a commitment to safeguarding the Queensland community, Fitton Insurance Brokers recommend that a client only select a level of excess which they can afford. Contact our team to get an in-depth explanation of insurance excess, how it impacts your premium and to find out about an excess that applies to your unique requirements.