Property Insurance
5. Premiums & Excess
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 10 Sep 2015
- A premium is the regular amount that must be paid usually monthly for a contract of insurance.
- The higher the risk the higher the premium will be.
- Some insurance companies do not cover damage that is very likely to occur such as flood damage to a home situated in a flood prone area.
- Alternatively the insurance company may charge a high premium to insure against the likely damage.
- Many insurance policies offer policy holders an ‘excess’ option under which the policy holder agrees to pay an amount of the claim themselves.
- For example if your excess under an insurance policy is $1,000 and your claim is $4,500 you must pay $1,000 before your insurance company covers the remaining $3,500.
- An ‘excess’ option usually results in the policy holder paying a lower monthly premium.
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