Insurance excess is the amount you must pay out of pocket before your insurer covers the remaining claim. It helps discourage small claims and keeps premiums economical.
Definition
Term
Meaning
Insurance Excess / Deductible
The portion of every claim paid by the policyholder before the insurer contributes.
Types of Excess
Type of Excess
Description
Compulsory Excess
Fixed by the insurer and must be paid.
Voluntary Excess
Chosen by the policyholder to reduce premiums, but increases out-of-pocket cost in a claim.
Example Calculation
Particulars
Amount (₹)
Claim Amount
10,000
Compulsory Excess
1,000
Voluntary Excess
500
Total Excess Payable
1,500
Insurer Pays
8,500
Key Takeaways
Higher voluntary excess reduces your premium but increases your contribution during a claim.
Always check your policy for the exact excess amount.
Choose an excess level that balances affordability and risk.
