Learn the ins and outs of business insurance excesses.
If you ever have to claim from your business insurer, you will need to pay an amount called an excess. In fact, this is the case when claiming for most types of insured incidents and is a way of you accepting a small portion of the risk yourself. This encourages you to self-manage small incidents to protect your claims history, while helping reduce your monthly premium – a higher excess should translate into a lower premium.
However, depending on your insurer, an excess can be structured in different ways.
Percentage-based excess
Many insurers use a percentage-based excess structure. And, as the name suggests, it will be a percentage of the overall amount claimed.
For example: Let’s assume your insurance policy incorporates a 15% excess. If you have a valid claim for a stolen laptop insured at R10 000, your excess payable will be R1500. This seems manageable enough.
However, what if your claim is for something big, such as the total loss of your business premises after a fire, insured at a value of R5 million? In this case, the 15% excess payable would amount R750 000. What would this do to your business’s cashflow?
Fixed excess
OUTsurance business insurance uses a fixed-excess structure, which means that your excess is always the same amount – no matter the size of the claim. Of course, this amount can be negotiated when you take up your policy.
Let us consider the above examples again, assuming you have a Business OUTsurance policy that incorporates a R2 000 fixed excess.
No matter whether you’re claiming for the R10 000 stolen laptop or the R5 million after your premises is lost to fire, you only pay the excess amount of R2 000.
Of course, this is extremely beneficial to your overall cashflow, because you know exactly how much you need to reserve in preparation for potential insurance claims in the future. In short, no nasty surprises that could potentially shut down your business.
Switch to the business insurance designed to keep you in business
A fixed excess is just one of the benefits of insuring your business with OUTsurance. In fact, there are many reasons why Business OUTsurance makes business sense, no matter what industry you’re in. If you’d like to know more, why not start a quote. And if your needs are complex, you can even arrange a one-on-one meeting with a Business OUTsurance Broker.