When it comes to car insurance or indeed any type of insurance, many people ask what the term 'excess' means on a policy as they find that they can save money if they have an excess applied, but do not quite understand whether it is safe to do so or not.
In short, if you have an excess clause on your policy, this means that if you have to claim on your insurance for any reason, then you will have to pay out a certain amount for the claim before the insurance kicks in, that is, they will not pay out against the whole of the value of the claim.
Put simply, imagine you have £100 excess on your car insurance and you have an accident. Let's say the damage comes to £500, then you will have to pay the first £100 against the damage and the insurance company will 'hopefully' pay the other £400.
It is fairly easy to understand but not so easy to decide whether to take out an excess on your policy or not. There are different levels of excess and although you can save considerably on the value of the premium, it is not so good if you cannot afford the excess in the event of a claim.
Personally, I go for excess but only with what I am comfortable with having to pay out if need be.
