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Question

Difficulty: MediumMotor Insurance Coverage and Legalities

Your motor insurance policy includes an excess of £250. What does this mean if you make an insurance claim for £1,000 worth of damage to your vehicle?

  1. A
    The insurance company will pay the first £250 of the repair bill
  2. You will have to pay the first £250 towards the cost of the repairAnswer
  3. C
    You are only insured if the total repair cost is less than £250
  4. D
    The insurance company will add £250 to your renewal premium

Answer

You will have to pay the first £250 towards the cost of the repair
An insurance excess is the specified amount the policyholder must pay towards any claim before the insurance company pays the remainder of the repair or replacement costs.

Step-by-Step Solution

1
Identify the legal and contractual definition of a motor insurance excess.
An excess is the fixed contribution the policyholder agrees to pay towards repair or replacement costs when making a claim.
Understanding policy structure distinguishes between insurer liabilities and policyholder deductibles.
2
Apply the £250 excess to the total repair claim of £1,000.
The policyholder pays £250, and the insurer covers the remaining £750.
Determines the exact financial obligation required before the claim is settled.

Key Concept

Motor insurance policy excess and policyholder contributions
Estimated Time:45s
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Topics

Motor Insurance Coverage and Legalities

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