All insurance policies will have a compulsory excess (otherwise known as a deductible), and this excess can be increased in exchange for a premium reduction. Or does it?
Different insurers will have different discounts for voluntary excesses, and the starting point at which their compulsory excess starts will also be different. Before you go ahead with any insurance, be it self catering, home, car or other property insurances, discover if the saving is worthwhile.
In general terms the lower the starting point the less the premium saving makes financial sense. Using our self catering scheme as the example you will see from the following that if you ask for an increased excess there is no premium saving as this is the minimum annual premium:
£ 100.00 general excess £152.58
£ 250.00 general excess £152.58
£ 500.00 general excess £152.58
£1,000.00 general excess £152.58
The advice is to ask your Insurance Broker for, firstly, the lowest general excess for the policy you are considering, and then to see what happens at the next step up. The saving maybe nothing!
However, if the premium is somewhat higher then the idea of an increased excess becomes more attractive so long as the premium saving does not wipe out the increase in the excess. As an example:
£ 100.00 general excess £1,900.00
£ 250.00 general excess £1,781.48
£ 500.00 general excess £1,614.54
£1,000.00 general excess £1,375.92
You can see that by increasing the excess by £900.00 ie from the lowest level to £1,000.00 the premium saving is £524.08 – sensible if you do not claim. If you wanted to increase the £250.00 excess to £500.00 the premium saving is £166.94 – and only you can decide if that is sensible.
I have referred to a ‘general excess’ and this means that most claims will have this deducted from any claim payment. It is very usual for any policy to have a separate escape of water excess – usually £500.00 – and a separate excess for subsidence, heave and landslip which is usually £1,000.00. An insurer can impose an excess outside of these, and if you are in an high flood area you are very likely to find a separate, much higher, flood excess. It is also sometimes known that if you are in an area particularly prone to storm that the storm excess will be higher. If you have had a string of claims you may find that the so-called ‘general excess’ is increased for the next few years until you cease having regular claims.
David J Morris ACII
www.selfcateringinsurance.co.uk
Chartered Insurance Broker
info@jlmorris.co.uk
J L Morris (Insurance Brokers) Limited