Author Topic: How do you handle insurance excess?  (Read 627 times)

Offline athikalaka

How do you handle insurance excess?
« on: December 09, 2016, 05:44:28 PM »
This may or may not differ with countries but most of our insurances have standard premiums which can be paid monthly or annually. The premiums vary depending on the committed excess. Assuming the premium doesn't change too much from year to year, I pay the premium in full (as it is usually cheaper if you commit to pay annually) and budget the upcoming 12 months for the next premium. Something that I haven't really thought about is the excess you need to pay should an incident happen. Do you allocate the upfront excess charge, let's say $500, with your budget category, or do you have it sitting elsewhere (either a special category for excess charges) or do you leave the entire excess out and should an incident occur, it simply comes out of your emergency fund? Currently I'm in the latter category and don't budget for it because you can't forecast the unexpected but you can prepare for it (emergency category budget).

Offline RPNnerd

Re: How do you handle insurance excess?
« Reply #1 on: December 09, 2016, 05:46:58 PM »
Yes, the emergency fund is for emergencies.  Unplanned things can "be" emergencies on the short term for finding where to make new categories or to fill back up the emergency fund because of it.

Offline Whatsup

Re: How do you handle insurance excess?
« Reply #2 on: December 09, 2016, 06:07:10 PM »
This may or may not differ with countries but most of our insurances have standard premiums which can be paid monthly or annually. The premiums vary depending on the committed excess. Assuming the premium doesn't change too much from year to year, I pay the premium in full (as it is usually cheaper if you commit to pay annually) and budget the upcoming 12 months for the next premium. Something that I haven't really thought about is the excess you need to pay should an incident happen. Do you allocate the upfront excess charge, let's say $500, with your budget category, or do you have it sitting elsewhere (either a special category for excess charges) or do you leave the entire excess out and should an incident occur, it simply comes out of your emergency fund? Currently I'm in the latter category and don't budget for it because you can't forecast the unexpected but you can prepare for it (emergency category budget).

I'm currently working on that myself. For example I have two Medical related categories. 1 for our Health insurance which is paid yearly, then a general medical category which I use for prescriptions, dr visits, test etc. I'm going to build that up with enough in this category for the day to day medical stuff and include at least 2 excesses which is about $1000. That way I don't have to raid the emergency fund. I'm thinking the same for my car as well. 1 category for the car insurance and another for Repairs/Maint, which includes the excess of about $700.   

At least that is the plan at this point in time. Will see how it works out though...

Offline Mike

Re: How do you handle insurance excess?
« Reply #3 on: December 09, 2016, 06:08:57 PM »
I have an "Unexpected Expenses" category that is on-budget and is used for things like insurance excess/deductible. I also have a larger "Emergency Fund" that is off-budget and only to be used in extreme situations such as a job loss.
In the Cascade Mountains of Oregon

Offline Bruce

Re: How do you handle insurance excess?
« Reply #4 on: December 09, 2016, 06:09:49 PM »
I would use the emergency fund for this.

Offline jenmas

Re: How do you handle insurance excess?
« Reply #5 on: December 10, 2016, 05:40:48 AM »
I have a medical out of pocket maximum category that if fully funded (if not fully funded at the beginning of the plan year, I usually get it there in the first quarter) should cover almost all medical expenditures (there are often medical expenditures that do not count towards the OOPM, but then I would dip into my Loss of Income fund).

I have a Home maintenance category that I keep topped up at $2K to fill the insurance gap.

I have a Vehicle maintenance category that I keep topped up at $2K to fill the insurance gap.