What defines the term 'excess' in an insurance policy?

The term 'excess' in an insurance policy refers specifically to the portion of a claim that the policyholder is responsible for paying before the insurer's coverage kicks in. This amount is also known as the deductible, which is set by the insurance policy. When a claim is made, the insurer deducts the excess from the total amount payable to the policyholder, meaning that the policyholder bears a certain degree of the risk. This mechanism helps to ensure that the insured party retains some financial responsibility for their claims, potentially discouraging frivolous claims while also enabling insurers to manage risk more effectively.

This understanding of 'excess' is central to grasping how insurance policies function, as it directly affects the amount that will be reimbursed by the insurer in the event of a loss. The other options do not accurately capture this definition, focusing instead on aspects like total coverage amounts, premium costs, or claim filing, which are not linked to the concept of excess in relation to claims.