This is an important part of insurance in which a lot of persons have overlooked and has seen it not to be necessary and most persons lack the idea of its existence. The following are the different questions that go through the mind of those who encountered or came across the term for the very first time…..
- What does these insurance excess entails?
- Is it necessary?
- What and in which areas does it benefit me from?
- Failure to pay my insurance excess, will it affect my claims?
- What does insurance excess have to do with my claim?
Insurance excess involves the amount one will have to pay if and when it is time you decide to make claims to your policy. This can also be said to be a way in which the insured becomes responsible for some part of the risk. It is worthy to note that the insurance excess differs in accordance to the policy to sign in for; thus, the insurance excess amount to be paid differs because it is the insured and his or her nature of policy signed with the insurance firm that will determine the total cost the insurance excess. It gives the insured this sense of him or her carrying some part of the risk. But it is worthy to note that in this aspect of the policy, the insurance firm or company pays much more than the insured. Insurance excess is said to be necessary because it helps in the balancing of the payment of claims as well as avoiding imbalance of payment for most insurance firms, mostly the ones that just started newly and does not have much idea as regards insurance and its principles.
How Does Insurance Excess Works?
Let us use a scenario of a young man named Ade who happens to opt-in for an auto insurance company, if there is damage to the car been insured, Mr. Ade will have to pay a certain amount. For instance, if the claims cost $5000, the insurance company will pay $4500 whereas Mr. Ade will pay the remaining $500. With this, it will give Ade a guide on how to follow certain insurance policies and how not to leave the total risk for the insurance firm.
There is one major type of Insurance Excess and it is known as multiple excesses. The multiple excesses reveal how the insurance excess fee will be taken, while some will be taken at the point of making a claim, some other ones are dependent on the claim been made.
Insurance and The Ways in Which Excess Can Be Paid?
Insurance excess is been in most cases deducted by the insurance companies or most times the insured are been directed to where the necessary payment (Insurance excess fee) should be made or done; remember the payment differs in accordance with the policies.
READ: 4 Basic Types of Risk Mitigation – Risk Mitigation and Insurance Firms
