An insurance excess is the amount the policyholder must bear when a claim is settled. It is a form of retained risk and can vary by policy section, cause of loss, vehicle, driver or location.
Different excesses may apply
- A compulsory excess set by the insurer
- A voluntary excess selected to influence premium
- A young or inexperienced driver excess
- A theft, flood, subsidence or escape-of-water excess
- A separate excess for property, liability or business interruption sections
More than one excess can sometimes apply to the same event. The wording should explain whether amounts are combined and whether the excess applies to each claim, each vehicle, each location or each affected item.
Consider affordability, not just premium
A high excess can reduce smaller claims and may lower cost, but the business must be able to fund it after a loss. Fleets should also understand whether the employer recovers any amount from a driver and whether that arrangement is lawful and documented.
Ask for the full excess schedule and note any special endorsements. The headline figure on a quotation may not be the amount that applies to the most likely type of claim.