What insurance really covers
An insurance policy is not judged on its premium. It is judged on what it pays out on the day of the claim, and that amount depends on three words written in small print: depreciation, excess, cap.
Everything is worked out in your browser. No amount leaves your device, nothing is saved, and the Clear button empties everything. How to check it.
Enter at least the amount of the loss: the result appears here.
One of the boxes does not hold a readable number, and it is flagged. Spaces, commas and full stops are accepted.
One of the boxes holds a perfectly readable number that describes no real situation, and it is flagged. For instance a loss of zero or less, depreciation outside 0 to 100, a negative excess, or a cap of zero: an empty box is how you say there is no cap.
| Base after depreciation | |
|---|---|
| After the excess is deducted | |
| What the insurer pays out | |
| What stays on you | |
| Share of the loss covered | % |
The cap has bitten: without it, the payout would have been higher. That is the line to check before signing, far more than the amount of the premium.
The method
The order of the operations is not decoration: it changes the result, and it is exactly what nobody reads.
- Depreciation first. The percentage for wear is taken off the amount of the loss: a device worth 600 with 30% depreciation gives a base of 420.
- The excess next. The share that stays on you is taken off: 420 minus 150 gives 270. The result never falls below zero.
- The cap last. If the result is above the cap, it is the cap that is paid out, and the rest stays on you.
An exclusion, on the other hand, is not calculated: it cancels everything. An excluded case gives a payout of nothing, whatever the amount of the loss, and that is why you read the list of exclusions before the list of cover.
How to compare two policies
Comparing two premiums compares nothing. The right way comes down to four steps: take the claim that is most likely for you, run it through both policies with this tool, compare what each pays out, then add the difference in premium over one year. The policy that costs least over the year is not always the one that costs least when something happens.
What this tool does not do
- It does not read your policy for you and detects no exclusion: those words have to be looked for in the terms and conditions.
- It recommends no insurer and names none.
- It ignores notification deadlines and appeal routes, which depend on the country: see Your country.
Read next: excess, cover cap, depreciation, exclusion.