What is excess insurance?

How does it work?

It is an insurance policy that covers the cost of your excess if you need to claim on another type of insurance. It is sometimes known as an excess waiver.

For example, if your car insurance excess is £250, you have to pay this before you can claim on your policy. But with excess insurance, you then get the £250 paid back.

What types are there?

There are two main types of excess insurance:

• Single policy which covers the excess on one insurance policy, for example, your car insurance.

• Lifestyle policy which covers the excess on several different policies. For example, your car, travel and pet insurance.

Here is more information on how to choose the right type of excess insurance

Pros and cons

Pros

• Reduces the cost of claiming

• Low monthly premium

Cons

• May cost more than you save

• You will need to claim twice

What is covered?

You can cover the compulsory excess set by your insurer, and any voluntary excess you choose to lower your premium. You can cover a range of policies, including:

• Car insurance

• Car hire insurance

• Van insurance

• Motorbike insurance

• Home insurance

• Travel insurance

• Pet insurance

You agree a cover limit with your excess insurer before you take out cover. This usually ranges between £250 and £750.

What is not covered?

It varies between policies, but the main exclusions of excess insurance are:

• Excesses that go over your policy limit, e.g. £750

• Events that happened before the start of your policy

• Claims not covered by your main policy

• Excesses that can be claimed from a third party, e.g. if they are at fault

• Claims where you have not met the terms of your hire agreement

Here is how to make a claim on your excess insurance

How much does it cost?

It varies between insurers, but some excess policies cost as little as £2 a month.

You should consider the cost of the excess on the policy or policies you want to cover before taking out an excess insurance policy, to decide if it is worth the cost to you.

Do you need it?

You should consider excess insurance if you are hiring a car. Most hire companies make you pay a £500-£1,000 excess if the car is damaged while you are using it, and excess insurance could cover this cost.

For all other types of insurance, weigh up whether the price of your excess warrants the cost of a policy. If your excess is less than the price of excess insurance, it is not worth it.

Here is how to decide if you should get excess insurance