Unless clients have elected to pay an additional premium for an excess-free policy, they will almost always pay an excess when they claim from their insurer- whether it’s their fault or not.
The Ombudsman for Short-Term Insurance recently commented on excesses. In the media release the Ombud answers the following questions:
- What is an excess?
- Why do you pay an excess?
- Are there different types of excesses?
- Does an insurer have to recover the excess you paid?
- What if your insurer does not recover the excess you paid?
- What to do if you have a dispute relating to your excess
On the question “Does an insurer have to recover the excess you paid?” the Ombud answered:
If someone else has caused the loss, the insurer may be able to recover the cost of the claim, including the excess the client paid, from them or their insurer. If the insurer recovers the total value of the loss, including the excess, the insurer will reimburse the excess paid.
There is no obligation on an insurer to recover the excess paid but if an insurer is going to attempt to recover its claim cost from the party that caused the loss, then the insurer usually includes, in its recovery, the excess paid by the client. The success of a full recovery however depends on several factors, including whether the other party was identified, whether they admitted fault, whether there are any witnesses, whether they have insurance and, if not, whether they have the ability to pay.
Click here to access more information about excesses and to download the media release – valuable information for your client.