For many of us, our home is a place of comfort, security and familiarity.
That’s why we’re often determined to protect it as far as possible through appropriate forms of property insurance. That typically covers things such as some types of natural disaster, subsidence, fires and perhaps flooding* also.
Yet did you know that if misfortune strikes your property, in spite of your insurance policy you could still end up paying out substantial sums of money?
- the insurance industry is under pressure to keep their costs down in order to do likewise with their policy prices (known as the premium);
- one method they use to do so is to ask the policyholder to make a contribution towards the cost of any future successful claim. That contribution is called ‘the excess’;
- the level of excess on any individual policy may vary considerably depending upon the nature of the cover (i.e. the type of insurance) being provided. In the case of some policies, it might be into four figures – a lot of money to find in the event you’re making a claim;
- the excess is a very normal feature of insurance and you’ll typically find it included in many different types of main policy cover. It’s sometimes referred to as ‘the first part’ of a claim because it will be an amount you’ll need to pay as the first part of a claim before any balance of settlement will be made;
- if that sounds confusing, consider an example. If you have a claim for damage amounting to some £1500 and an excess on the policy of £1000, then the insurer will calculate how much your final settlement will be based upon £1500 minus the £1000 excess, in other words a balance to pay in final settlement of £500. That’s why your excess is called the ‘first part’ of a claim;
- in the case of your home insurance policy, the excess levels may vary depending upon whether you’ve opted for a higher voluntary excess (as a way of reducing your premium) or simply have the mandatory component in place;
- if you’re worried about the level of excess you’re exposed to, you might be able to cover it with a separate policy. Such a policy is predictably called home excess insurance;
- some providers of such policies might be willing to offer an excess protection policy that will, for a single premium payment, cover the excess of several of your other policies. That means it will reimburse you, under qualifying circumstances, for any excess you’ve been forced to pay as part of a claim on your main household policy or your motor insurance etc.;
- keep in mind though that your excess protection cover will only apply in situations where your main claim has been accepted and where the amount of the claim exceeds the main policy’s excess.
In the event of a trauma connected with your property, you’ll want your insurance to play the role of freeing you up from financial concerns so you can focus on getting your home back together.
Needing to worry about where you’ll find the excess isn’t going to help you to achieve that – which is why home excess cover just might prove to be invaluable.