why do insurance companies charge an excess before they pay out?

Answer 1

I think you are thinking of a deductible. I have heard some people say excess instead of deductible. It is just the amount that you are going to pay before the insurance company will begin to pay. If you didn't have a deductible or excess on your policy people would turn every small claim in. That is not what insurance is for. It is for the bigger things. Years ago I had someone turn in a claim for a new manual for their vehicle. They said it was stolen and he has no deductible on comprehensive. I wrote out a check for 5.00. The cost to set up the claim exceeded the amount paid out.

Answer 2

Depends on what you feel is excess... considering the fact that liability claims tend to rise as do vehicle costs, and repair costs, insurance premiums will follow suit.
I for one, dont mind paying $1000 or $2000 a year for $300k worth of coverage.
I'm sure if you were in an accident where you were sued and the insurance company took care of your defense and paid $25k to the other driver.... you'd be singing a different tune.

Answer 3

Charge an EXCESS? Excess of PREMIUm? You mean, you want the policy now, and you want to be billed for all the claims LATER?

Come on! How many people are actually going to PAY the bill when they get it later? Maybe half. The other half will just say Forget It, they're rich, let 'em rot & chase me for it!

Ever try to buy a carton of cigarettes, and tell the guy you'll come back NEXT week to pay for it? Yeah, right!!

Answer 4

Could you be a bit more specific? An excess of what?

You know, if you've got a huge claim, say for an auto accident where you totaled your brand new car and you want them to pay out $25,000. I'd have to say the insured got the better end of the deal because I'll guarantee you that you didn't pay them $25,000 in premiums before you filed that claim.

Answer 5

for profit - you didn't think insurance companies were in it for good will did you? They are just money making factories set up to take your money and return as little as possible.