An excess (or deductible) is the amount you agree to pay towards the cost of a claim before your insurer contributes. It represents your share of the risk and helps keep premiums affordable by discouraging minor or frivolous claims.

Your excess is usually clearly shown on your policy schedule and may differ depending on:

• The type of policy (e.g., Business Property, Professional Indemnity (PI), Public Liability (PL), Motor Insurance)
• The section or coverage type within the policy
• The specific circumstances of a claim

Excesses can work differently for different types of insurance policies. For example:

Business Property Insurance #

With Business Insurance or Commercial Property Insurance, excesses can vary depending on the section or insured event. For example:

• A standard excess may apply to fire, storm, or malicious damage.
• A higher or separate excess may apply for theft, flood, or glass breakage.
• Additional excesses could apply for specific perils, locations, or types of property (e.g., portable electronics).

Each section’s excess will apply separately if claims arise under multiple sections of the policy from the same event.

Professional Indemnity #

In Professional Indemnity insurance, the excess applies to the settlement amount and/or legal costs, depending on your policy:

• Inclusive excess means your excess applies to both the compensation paid and legal defence costs.
• Exclusive excess means your excess applies only to the settlement amount, and the insurer covers legal defence costs from the first dollar.

This distinction can significantly impact your out-of-pocket costs in the event of a claim.

Motor Insurance #

Motor insurance often involves stacked excesses, where multiple excesses may apply to the same claim. For example:

• Standard/basic excess: This is the general excess that applies to most claims.
• Age excess: Additional excess applies if the driver at the time of the accident is under a certain age (e.g., under 25).
• Inexperienced driver excess: This applies if the driver has not held a licence for a specified minimum period.
• Undeclared driver excess: If someone not listed on the policy was driving, another excess may apply.

All applicable excesses are added together and deducted from the claim payout. This means that in some cases, multiple excesses can significantly increase your contribution towards a claim.

For example:

If you have a $600 standard excess, a $500 age excess (under 25), and a $400 undeclared driver excess, you could be paying a combined $1,500 towards the claim before your insurer pays anything.

Increasing your excess is a common way to reduce your insurance premium. By choosing to take on a higher excess:

• You lower the insurer’s risk exposure on smaller claims.
• The insurer rewards this by charging you a lower premium.

However, it’s important to ensure the excess you choose remains affordable if you ever need to make a claim. The difference between an inclusive excess and an exclusive excess, or a stackable excess, can be significant.

Our team is here to help you with any questions you might have.