What Is An Excess Charge On A Contents Insurance Policy For?

Many insurance policies have excess charges, and home contents insurance is no different. For example, although you may have a valid claim for damage to a television that will cost, says �450 to replace, and your excess is �50, the insurance company will give you �400, which is the value of the claim minus the excess charge.

The idea of the excess charge is two-fold. Firstly, it lowers the amount of money that the insurance company pays out to its customers. Second, it stops customers making lots of claims for little things, as it probably costs the insurance company roughly the same amount to settle a claim for a thousand pounds at it does to settle a claim for a fifty pounds. So the excess charge will make people think before making a claim for something of a relatively low value.

You can choose the excess on your policy to some extent with most home contents insurance providers. Many of them have a standard excess charge but will lower it if you pay a more expensive premium. It should also be noted that some companies have an excess charge that rises as the cost of a claim increases, so it's more for a �5,000 claim than for a �500 claim.