What role does the insurance excess serve when making a claim?

The insurance excess serves a specific function in the claim process by reducing the total amount of the claim that is payable by the insurer. When a policyholder makes a claim, they are typically required to pay the excess amount before the insurance coverage kicks in for the rest of the claim. For example, if a policyholder has a claim amount of £1,000 and an excess of £200, the insurer will pay £800 after the excess has been deducted. This mechanism not only helps to limit the insurer's liability for smaller claims but also encourages policyholders to take care of their insured assets by sharing some of the costs associated with a claim.

In contrast, replacing the need for a claims history does not apply here, as the excess is unrelated to the documentation of past claims. Additionally, the excess has a significant impact on the claim process by determining the amount that the insurer will actually pay, which means it cannot be true that it has no impact. Similarly, the excess does not increase the payout amount; rather, it reduces what the insurer will pay out, thus emphasizing the role of the excess in contributing to the total settled amount after a claim.