In insurance terms, what does the "excess" refer to?

In insurance terminology, the "excess" refers specifically to the amount that the policyholder is required to pay out of pocket when making a claim, before the insurer contributes the remainder of the covered loss. This is an important concept in claims handling, as it establishes a shared responsibility for the loss between the insurer and the insured.

When a claim is submitted, the insurer will deduct the excess amount from the total claim payment. For example, if the claim amount is £5,000 and the excess is £500, the insurer would reimburse the policyholder £4,500. This mechanism can help to prevent minor claims, as policyholders may be reluctant to claim for smaller amounts that would be less than or close to their excess.

The other options do not accurately reflect the meaning of "excess." The total amount the insurer pays for a claim pertains to the claim payout, which is not what "excess" means. A fee charged for policy amendments relates to administrative costs not associated with claims handling. Finally, the value of assets covered by a policy refers to the sums insured or coverage limits, rather than any deductible amount in the claims process.