Insurance in Australia – Insurance Basics
To offer a brief explanation, when you take out an insurance policy in Australia, you pay a monthly or annual premium. A premium is the amount of money you pay to your insurance company for your insurance policy, in return for the insurance company’s promise to cover you if something that is covered by your policy goes wrong.
Most policies include an excess. The excess is the amount that you have to pay if you decide to make a claim on your policy. The amount of your excess is specified in your policy. Choosing a higher excess amount may help to bring down the cost of your insurance premium because the insurer won’t have to pay out as much in the event of a claim. For example, if you have an excess of $400 on your home contents insurance and your house is burgled, you would pay the first $400 to replace the stolen items and the insurer would pay the remainder.