Excess Insurance Policies
Car insurance can often be extremely expensive and is compulsory in the UK. However even though you may pay out hundreds of pounds per year, you can still have to pay out more in the case of an accident, in the form of your policy's excess.
Two issues that present themselves when one tries to claim on their car insurance. The first of these is the fact that doing so may damage any no claims bonus that you may have built up, therefore increasing the price of any future policy that you sign up to.
Another problem that people have when claiming on their car insurance, is the amount that you may have to pay in the case of an accident. This is known as your policy's "excess" and the amount will vary depending on the terms of your own plan.
Excess insurance is designed to cover the cost of your main insurance plan's excess. This means that in the case of an accident, you will not have to pay for the cost of your insurance's excess.
Excess - What is it?
An excess is a payment that your insurance company will ask you to pay towards any claim that you may make.
Normally the total sum of your excess will be divided into two parts. The first part of your excess is your compulsory excess. This sum is set by your insurer and will often vary upon your age and your driving experience. The type of car that you are insuring will also be a factor in deciding how much you will have to pay towards this.
The second part of your excess is known as your voluntary excess, this is set when you apply for your insurance policy. The higher the level of your voluntary excess, the lower the yearly cost of your plan. This can be a good way to lower the initial cost of your insurance policy but it is worth remembering that in the case of an accident, you will have to pay this amount in full.
Excess Insurance Explained
Excess insurance is a form of insurance that works next to your traditional car insurance policy. This insurance will pay for your excess in the case of an accident, the total amount that your excess insurance will cover varies depending on the amount agreed between you and the insurer.
You choose the upper limit of your excess insurance. The most sensible thing to do is to set it to equal the upper limit of your car insurance's excess. This is because if you set it higher than that, then you will end up paying higher premiums for an excess limit that you will never reach. Another option is to set a lower limit to your excess insurance, this will then not cover the whole amount of your excess but it will still go some way to helping you foot the bill.
Types of Excess Insurance
There are generally two types of excess insurance that you can purchase. The first of these is excess car insurance - the form which we have discussed here. The second type of excess insurance is known as lifestyle excess insurance. This form of excess insurance covers excesses on several different types of insurance policies. These include, but are not limited to, pet, home and travel insurance.
One thing to remember when you take out a lifestyle excess insurance policy is that your excess limit is applied across all your insurance policies. This means that if your limit is £300, then you cannot claim more than this throughout all your polices per year. For example if you claimed £250 on excess insurance for a car insurance claim, then you only have £50 remaining for the rest of the year.