What is meant by "excess" in an insurance policy?

In the context of an insurance policy, the term "excess" refers to the specific amount that is deducted from a claim payment before the insurer pays out the remaining amount. This means that when an insured event occurs and a claim is made, the insured must pay the excess amount themselves, and the insurer will cover the remaining balance of the claim.

For example, if a policy has an excess of $500 and the total claim amount is $2,000, the insurer will pay $1,500 after the insured pays the excess of $500. Excess is often used to encourage policyholders to be more careful with their insured properties and to avoid small claims, thereby contributing to controlling overall insurance costs.

The other options relate to different aspects of insurance or do not accurately define "excess." The total premium paid for coverage refers to the cost associated with the insurance policy, while a percentage of the claim that isn't covered by insurance describes a co-payment or co-insurance scenario. A bonus offered for no claims refers to a no-claims bonus, which is a reward for not making claims during a policy period, and is not related to the definition of excess.