‘Excess’: More to pay, not more to receive
This article explains the concept of 'excess' or 'deductible' in insurance policies, clarifying that it represents a portion of a claim the policyholder must pay. It also discusses the industry's potential move toward mandatory co-payments to manage risk and reduce small, administrative-heavy claims.
Why it matters
Understanding insurance terminology helps consumers make informed financial decisions and manage their personal risk effectively.
When you read your insurance policy, if you read it, you may come across a term called ‘excess’. Usually, it says ‘excess on this policy is ₹1,000’ or something like that.
And no, it does not mean the insurance company is going to give you something extra.
It means the exact opposite, that you will pay something. In this case, the first ₹1,000 of each claim in this policy. The insurance company starts paying only after you have picked up your share.
Some policies have a compulsory excess. You can also opt for a voluntary excess which will be over and above any compulsory excess.
Why ever would you opt for bearing part of your own claim? Because of the small silver lining that you get a premium discount for it.
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