Nothing succeeds like excess
In its latest Insured Interest newsletter Moore Stephens explains that a deductible is the American way of describing what the rest of the world calls an excess. American underwriters start with a total sum insured. Then they deduct the deductible, leaving you with the amount you are allowed to claim. In the rest of the world, however, you start with nothing. Then you stipulate an excess. Anything over and above the excess can be claimed for under the policy, up to the insured value. Any excess will do, although gluttony is particularly unattractive.
The deductible and the excess may sound like the same thing, but they are. In both cases, they are an alternative to putting up rates. But there the similarities begin.
If you insure your house for £1m and there is a £1m excess under the policy, you will start with nothing and end with nothing. If you are American, however, you start with £1m and end up with nothing, plus you lose your house. This is bad luck, and means that you will have to live the rest of your life as a tramp.
In England a tramp is a king of the road, while in America it is a lady of the night. In both cases you start out with something and end up with nothing. This is invariably the result of the worst kind of excess.
Don’t go to card games with barons and earls.