#InsuranceDecisions #ExcessAmounts #InsuranceTips
Hey everyone! 👋 I’m in the process of reviewing our insurance policies and one thing I’m stuck on is deciding on excess amounts. I’ve never had to make a claim in over 20 years, so I’m not sure what the best approach is.
Here are my current excess amounts:
– Car: $900
– Home: $2000
– Contents: $1000
– Landlord: $1000
I’m wondering how other people decide on their excess amounts. Do you go for higher excess to lower premiums? Or do you prefer lower excess for peace of mind?
Personally, I think it might be wise to consider:
– Your financial situation and ability to pay the excess in the event of a claim
– The value of the items you’re insuring
– Your risk tolerance and how much risk you’re comfortable with
What do you guys think? Any tips or insights on how to decide on excess amounts for insurance? Let’s share our experiences and help each other out! 🤔💡
Insure what you can’t afford.
If having to pay a $900 fix on your car is no problem, then don’t spend money to insure lower.
I choose highest excess to reduce premium.
never had an at fault insurance claim, be it home, contents, car etc. all my excesses are at max.
I usually choose the highest excess because its cheaper per month. The way I decide is that I know after i pay all my bills, i still have a large amount left over each paycheck. This usually always goes into savings or investments. So it means no matter what I will always have enough cash for a sudden accident where i need to pay a large excess
Having a high excess is fun and games until you have to make a claim. No matter how much you’ve saved it stings…
For home and contents I set it to the lowest ($200), as most claims are glass or accidental damage. Which start from $400 and upwards.
I usually reduce the excess until it gets stupid. So $2000, $33 a month, $1000, $30 a month, $700, $28 a month. If it’s $200 and blows out to $60 a month… you get the idea! High excess generally isn’t worth it unless it’s a high value item (where they will take the excess out of the settlement) and you don’t need it to live. The more you use something generally the lower the excess you should have.
So car insurance if you are driving every day should be a low excess for example
I sometimes look at it as what I wouldn’t bother insuring. e.g. if I had a $2,000 car I wouldn’t bother with comprehensive insurance, so a $2,000 excess seems reasonable. It can also pay to look at how much reduction you get. I’ve wasted too much time with cars getting quotes for all the different excesses and calculating how many years I’d have to go without a claim for the higher excess to pay off. Usually settle for around the 1 in 10 years level as I’ve averaged much better than that so far.
I think the worst (but quite common choice) is to pay the extra to have a low excess, but still not make any claims because you are worried about the premiums increasing. If you are not going to bother with small claims, at least choose a high excess to benefit.
As an insurance manager with 16+ years experience, you choose the excess amount that can comfortably and reasonably part with at an unexpected moments notice.
If you have $1k sitting in a seperate account that you can draw upon, then choose a $1k excess. If you can’t afford to part with it, then choose a lower excess. If you have $5k, then perhaps bump up the excess in order to save a bit on premium.
I go with 5 years.
So keep increasing excess until
Δ Excess > Δ Premium X 5
So a $200 excess increase that drops premium by $50 = Good
$200 excess increase that drops premium by $10 = Bad