An insurance policy in which the insured is responsible for paying a specified sum (the excess) of each claim and cannot make claims of a lower value than this excess. For example, a £100 excess on a motor-insurance policy means that the insured has to pay the first £100 of any claim and cannot make a claim on the policy for less than £100. This arrangement enables the insurer to offer the insurance at a lower premium than would otherwise be the case as he avoids the administrative cost of small claims and also makes a saving on claims paid out. See also deductible; franchise.
Subjects: Business and Management.