What Impact Do Excesses Have?
When you arrange landlord insurance, one of the features that you need to be aware of is the amount of excess that may be payable in certain situations. However, before looking at the impact that an excess may have on your cover it may be a good idea to explain what an excess is.
Quite simply, an excess is the amount that you may be expected to pay towards the amount of a claim. For instance, if your investment property that you are letting out was to suffer subsidence and it cost £50,000 to carry out the repair costs, you may be expected to pay an excess of, let’s say £1,000. Therefore, the insurance company would pay the remaining £49,000.
The amount of excess and when an excess may be payable may vary between different providers of landlords insurance so you may wish to look into this before deciding which company to arrange cover with.
Typically, you may find that no excess is payable for damage to the buildings or contents caused by things like fire, earthquake and explosion. Any other insured damage where an excess is payable may incur an excess of in the region of say £200 with the exception of subsidence cover as referred to earlier. However, it may be possible to choose to vary the amount of the excess and instead of paying say £200 agree to pay an excess of between say £100 to £500.
The potential benefit of an excess is that it may reduce the premium that you pay as you are agreeing to make a contribution towards the cost of a claim. If you are able to pay a higher excess this should reduce the premium that you pay even more.
The downside of having to pay an excess is that you will have to find the amount of the excess when the claim is settled. This may come at an unwelcome time.
Hopefully, the above has been informative.