What policy excess should you choose?
Excess choices are normally be offered by your broker when they obtain quotations for you to consider for your block. An excess is the first part of a claim which is paid by the Policyholder.
For example, your quote could be offered with a £100 excess. If you prefer a NIL excess the premium would normally increase or your premium could be reduced further by asking for a higher excess.
The Insurer pays amounts in “excess” of this first amount paid by the Policyholder. An excess may be compulsory (i.e. imposed by the Insurer) or voluntary if accepted by the Policyholder in return for a premium reduction.
You should choose your excess dependent on how your Company is set up and what you can afford.
We have found that Residents’ Management Companies are set up very differently in regards to how the policy excess is paid. Some Residents’ Management Companies expect the person who has caused the damage (for example in the event of a water damage incident where the water has flooded through to the flat below) to pay the policy excess and others arrange for the person that suffers the damage to pay the policy excess. Some Residents’ Management Companies organise to hold a fund to pay the excess.
There are no strict rules unless it is contained in your lease on how the excess should be paid. If this requirement is not in your lease then you should discuss and minute at your AGM and also send the decision to all owners – enabling all to have the opportunity for them to disagree.