Excess Buy Back
Excess Buy Back
Excess in insurance is the amount you have to pay towards the overall cost of an insurance claim. It's usually a pre-agreed amount. Your insurer will then contribute the rest up to the limit of the cover. You'll see insurance excess on insurance products like travel, motor, home and health.
Remember insurance excess is the out-of-pocket amount you have to pay when making a claim with your Insurer. For example, if your standard excess is 500 and your repair claim is 2000, that means you'll have to pay 500, while your insurance company pays the remaining 1500.
Excess Buy Back reduces or remove the amount of your excess for an additional premium. Therefore it is an amount you pay to cover up for the excess charge at the inception of a policy. With EBB you do away with the policy excess contribution on your private insurance claim.
For example, if your car worth is 1,000,000 Million and your charge a rate of 3.5% as the premium, it will be 350,000 ; hence the excess buy back if at 10% of the premium that will be 35,000.
However, there is a way to soften the blow that the high excess inflicts on your finances when you have to make a fault claim by buying an excess protection policy, called Excess Buy Back, that refunds / reimburses you the paid excess.
The main reason why insurers apply an excess is so they can eliminate most of, or if not all, of the minor or small claims. The cost to the insurer for the dealing with minor or small claims would only cover the administration charges therefore, they add an excess to the policy to avoid such minor claims.
It is good to get a motor vehicle comprehensive insurance policy where excess is bought.
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