Excesses, Deductibles and Franchises:
This is the first part of each claim which the insured must bear, it only applies at the time of claim, hence if
there is not claim, there is no excess to pay.
These are deducted for each and every claim and deducted from claim payment. They are meant to
avoid the insurer paying small or trivial claims. They can vary from £100 to £1,000 (for subsidence claims)
In exchange for a premium discount, the insured can opt to take another excess. Should a loss occur,
the insured will be required to pay both. In liability policies, this can be termed uninsured loss. Legal
expenses insurance can be purchased to recover such from a negligent third party.
This is usually a large excess, An insured (usually with a large commercial concern) may choose to act as
their own insurer for an agreed sum insured, thus seeking insurance protection above that limit.
This was the first way an insurer used to make clients responsible for the first part of a claim
before excess was even created. How it operates? Any claim under a certain amount, the insured
bears on his own, however for all claims above that limit, the insurer pays in full. Time
franchises are found in benefit policies. The insured must wait a minimum number of days before
the policy will respond with compensation. Example for Renewals – 7 days, New Policies – 21 days