Insurance Excess: what it is, how it works and where it is applied
If you are thinking of taking out an insurance policy and you come across the term "excess", it is normal that you have doubts. Does it mean that you will pay less? In which cases is it convenient for you? In this La Web de Seguros article, we will explain what an insurance excess is, how it works, what types of insurance it applies to and what you should take into account before deciding. We will explain it to you in a simple, non-technical way, so that you can make an informed decision.
What is an insurance excess and how does it work?
Understand how it affects your policy and choose the option that suits you best with no surprises.
What is an insurance excess?
The insurance excess is a fixed amount of money that, in the event of a claim, will not be covered by the insurer. That is to say, this part will be borne by you as the insured.
For example, if you take out insurance with an excess of €200 and you have a claim with damage of €1,000, the company will only cover €800. The remaining €200 will be borne by you.
This type of insurance usually has a lower premium precisely because the insured assumes part of the risk.
Where does the insurance excess apply?
Car and other vehicle insurance
It is in car insurance that the concept of excess is most frequently encountered. It tends to be applied mainly in comprehensive insurance, especially in the guarantee for own damage.
The excess allows you to reduce the cost of the policy, but it also means that you will pay a part of the damage in each claim. Read the contract carefully and understand when it applies.
In guarantees such as theft o fireIn the case of motorbikes, the excess is less common, although it may be more frequent in motorbike insurance.
Practical example
Suppose you take out comprehensive insurance with an excess of €200. Your car suffers three damages:
- Front damage: 650€.
- Rear impact: 250€.
- Driver's door: 200€.
The loss adjuster considers them as separate claims, and the excess is applied to each:
- 650€ - 200€ = 450€ (to be paid by the insurance company)
- 250€ - 200€ = 50€ (insurer)
- 200€ - 200€ = 0€ (all paid by you)
Result: you will pay €600 and the insurer €500.
Liability insurance (CR)
In the civil liability insuranceIn the case of insurance, an excess is also common. It is often applied in the insurance of:
- Professional CR
- CR of communities
- CR for water damage
- CR of animals or machinery
In these cases, if you cause damage to a third party and the insurance includes an excess, the insurer will deduct that amount from the compensation.
Another example
You have an excess of €300 on your liability insurance. You cause damage of €850 to a third party. The insurer will pay €550. You pay the remaining €300 directly to the injured party.
Community or building insurance
At community insuranceThe franchise is very common, especially when the property is old. It is applied in guarantees such as:
- Water damage
- Troubleshooting and repair
- Liability
The older the construction, the more likely it is that an excess will be included to reduce the cost of the policy.
Other common franchises
The franchise may also appear in:
- Home insurance
- Travel insurance
- Trade insurance
- Insurance for SMEs
It must always be detailed in writing in the contract, whether in the particular or general conditions or in annexes.
Advantages and disadvantages of taking out insurance with an excess
Advantages:
- Reduces the price of the policy.
- Ideal for people with low accident rates.
- Protects you from large claims while maintaining a lower premium.
Disadvantages:
- You pay part of the damage in each claim.
- There may be multiple franchises per event.
- It is not always clear in which cases it applies.
How to calculate the excess on a comprehensive insurance policy?
There is no universal formula, as it depends on the type of insurance, company and conditions. Some insurers offer excesses from €150 to much higher figures. The higher the excess, the lower the price of the insurance.
It is best to consult a specialist advisor who can help you find the best option according to your needs. At La Web de Seguros, we will guide you without obligation.
Conclusion
The insurance excess is a useful tool to adjust the price of your policy, but you need to know exactly what it implies and when it is applied. From La Web de Seguros, we encourage you to review the conditions of your contract and consult us if you have any doubts.
Remember that insurance is not just about price: it's about peace of mind, confidence and support. And that's what we're here for.
Do you have doubts about your current insurance or do you want to compare coverage with excess? Get in touch with us through lawebdeseguros.com and we will help you without obligation.