Insurance is a means of guaranteeing that you will be compensated a substantial amount of money in recovery of an event like damage to an asset (property, vehicle, etc), illness, injury, death, etc. You pay insurance companies a premium and in exchange they will guarantee a safety net for you which can help you more easily bounce back from catastrophic financial events. It’s a powerful psychological purchase because you have certainty that you will continue to be financially secure, even if the worst tragedies of life occur.
An excess is an out-of-pocket payment you make when you make claims. Insurance policies may let you pay a greater excess in return for a smaller premium. When you have an asset that’s covered by insurance damaged for 400, then the insurance company pays $600.
The premium is the amount you pay as part of an insurance contract. The value of the premium takes into account the insurance company’s view on how much of a risk you are, or in other words, how likely you are to make a claim and cause them lose money.