Don’t just look at the headline price when taking out insurance, check the small print to see how much it can cost if you need to make a claim.
Making an insurance claim could set you back hundreds of pounds in some cases due to the excesses imposed by insurers, so make sure you do your research when taking out an insurance policy.
According to Financial research company Defaqto, 78 per cent of travel policies now impose multiple excess charges. This means that you’ll have to pay an excess on each part of the policy you claim on rather than facing a one-off charge.
Defaqto’s insurance analyst Mike Powell warns consumers: “You must understand the key elements of your policy or you can face a nasty shock when you come to make a claim.”
Read on to understand how insurance excess works, so you don't pay more than you want to in the event of a claim.
Travel excess
Unlike car or home insurance where it’s usually one excess per claim, most travel insurance policies charge an excess for each section of the policy you claim under. So if you’re mugged and your passport and money is stolen you could face a bill for excess charges on the loss of each. This is because many travel policies would consider loss of money and loss of passport as separate claims.
This means a single incident could cost you £100 with a Direct Travel policy based on its £50 excess. On the other hand, insurers including Direct Line, Churchill and the Co-op charge just one excess per claim, regardless of how many sections you’re claiming under. Churchill and Co-op have a £50 excess and it is £35 with Direct Line.
Home & car insurance
These policies may sound better value with one excess per claim, but it’s the actual cost of that excess you need to check as according to Defaqto, these have shot up over the last three years. Half of home insurance policies now apply a minimum excess of at least £100, up from 30 per cent in 2008. And with car insurance policies, the number charging an excess of between £150 and £249 for a fire or theft claim has jumped 30 per cent in the last three years. The message here is: when opting for car and home insurance compare excess amounts between providers so you are comfortable with what you have to pay in the event of a claim.
Pet policies
The thing to check here is whether your pet insurance policy charges an excess per condition or per claim. For long-term conditions requiring ongoing treatment a per condition excess means a one-off charge rather than paying an excess for every vet visit or prescription.
Paperwork costs
The excess isn’t the only cost to watch out for. If your insurer wants evidence to substantiate your claim, such as doctors’ certificates or independent reports, you’ll be liable for the cost of these, warns Malcolm Tarling from the Association of British Insurers (ABI).
“Most policies won’t cover additional costs incurred in making your claim,” he says.
This can be around £25 for a doctor’s certificate if for example, you’re unwell and forced to cancel your holiday, or having to pay for written quotes for garage repairs.
“An increasing number of vets now charge fees for paperwork needed to process insurance claims,” says Mark Johnston from the British Small Animal Veterinary Association.
Charges are typically from around £15 a time and will be listed in the practice’s terms and conditions.
Costs if your claim’s rejected
While the cost of gathering any paperwork for your claim is down to you, you won’t have to pay the excess if your insurer rejects your claim, says the ABI’s Malcolm Tarling.
If however you feel an insurance claim has been unfairly rejected you can appeal. Do this by first writing to your insurer and then, if you’re unhappy with its response, by contacting the Financial Ombudsman.
