The Importance of Checking the Excess Amount before Taking out Insurance
When looking for a contents insurance policy, you may find a lot of policies which seem to cover similar amounts of damage but have disparity between the monthly payments. For example, you may find two insurance policies that offer to insure up £10,000 worth of possessions, but one will have monthly payments of £60 while the other has monthly payments of £10. What’s the difference between these two policies, and why on earth would anyone pay an additional £50 per month if their insured amount is going to be the same either way?What you may not realize is that the excess amount for these two policies is probably very, very different. On a £10,000 claim, you will almost always have to pay an “excess” - a small amount which you are accountable for and which the insurance company will only pay above. So if you make a £500 claim, you have to pay the excess - and this can vary greatly depending on which of the two above policies you choose.With the policy where you pay only £10/month, your excess is likely to be significantly higher, so you’ll only want to take this policy if you anticipate having to claim a much higher amount. If you take this policy and your loss doesn’t exceed your excess, you won’t receive a payout from your insurance company. Meanwhile, the £50/month policy may look like it costs more, but if you pay £600 over the course of a year and then lose an item worth considerably more than your excess, you’ll wind up saving money on your insurance in the long run.
