What Are The Consequences Of Having Policy Excesses With Property Owners Insurance?

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The main reason for a policy excess applying is that the Insurer avoids small frivolous claims, which will erode the premium they have charged.

The purpose of this stance is also to ensure that the policyholder retains some of the risk themselves for smaller instances of damage and thus has an interest in maintaining the property in good order to some degree.

However, in a situation where the risk of certain frequently occurring claims exists (e.g. escape of water in apartment blocks), the Insurer may place a specific higher policy excess in relation to that peril (e.g. a €5,000 water damage excess) and furthermore, where a number of claims have been made during the course of a policy of insurance, the Insurer may move to increase that policy excess (e.g. a €10,000 excess), or in a more extreme case, remove the cover completely.

Insurance policies provide coverage against losses that occur only on a chance basis, where the insured cannot control the loss i.e. fortuitous loss. If a particular loss is occurring more frequently and/or more severely, the Insurer will move to eradicate this, as is their business to do so, and thus place the onus on the insured policyholder to eradicate the risk themselves. In other words, if the potential loss is as a result of something that WILL or is highly likely to happen, then they will not provide cover in this instance or may apply an excess that is so high that they will only pick up extensive damage claims.

In the event of a higher excess applying, the insured will be responsible for that excess themselves and this amount will be deducted from any agreed claim settlement amount. Some policies, like Professional indemnity insurance  (see https://www.safaughnan.ie/business-insurance/professional-indemnity-insurance/ fore info) give you the option to choose an increased excess in order to reduce the premium paid at specific indemnity levels.