Insurance Excess - Non recoverable insurance amount
Insurance excess is the amount of a claim that the customer agrees to pay prior to buying the insurance policy. Excess is usually a set amount or percentage of insurance cover that the customer is responsible for when making a claim. Excess exists to limit fraudulent insurance claims and reduce the risk to insurers of this.
When taking insurance cover out the consumer entered into a legally binding contract with the insurer where the consumer agreed to pay the first £X amount of any claim irrespective of blame. This is excess and is an uninsured loss and has to be paid as a condition of the insurance policies claims procedure.
Insurance Excess Example
Mrs B has taken on firm A`s insurance on her new washing machine. In the terms and conditions for the insurance policy it clearly states the customer is liable for the first £20 of any claim. The washing machine works fine for eight months and the develops a fault requiring maintenance. Mrs B dutifully contacts firm A and informs them of the problem and starts the claim procedure, and informs them she has been quoted £120 to fix the fault. Firm A agrees with the claim and informs Mrs B of the decision.
Firm A`s claim procedure is that the customers claim is accessed and if agreed upon the firm pays the customer direct and does not directly get involved with third parties.
While waiting for payment for the claim a repairman is hired and fixes the fault, handing Mrs B an invoice for £120. Mrs B sends the invoice to firm A and they shortly send a cheque for £100.
The £20 outstanding on the invoice has to be paid by Mrs B, as that is the excess on the insurance policy.
Excess Information
When searching for an insurance policy customers could use the amount of excess the insurers insist upon as a comparison between different insurers and their products.