What does $5000 excess mean?

What $5000 excess means in insurance is very high excess where you pay first $5,000 of any claim before insurer pays remainder, used to reduce premium significantly for high-value properties or to avoid small claims. For example, if you have home building insurance with $5,000 excess, and you have storm damage claim $20,000, insurer deducts $5,000, you receive $15,000 and you pay $5,000 to repairer, if claim $4,000 with $5,000 excess, you receive $0 as claim less than excess, so you would not claim. $5,000 excess reduces premium 30% to 50% compared to $500 excess, for example building $500K premium $1,800 with $500 excess versus $1,200 with $5,000 excess saving $600 per year, suitable for landlords and high-net-worth who can afford $5,000 out of pocket and only want cover for large losses over $20K, not small claims. For car insurance, $5,000 excess unusual, typical $500 to $1,000, $5,000 would be for high-risk drivers or expensive cars $100K+ to reduce premium. For jewellery, $5,000 excess not used. So $5000 excess means you pay first $5,000 of any claim, insurer pays remainder up to sum insured, premium lower but you need emergency fund $5,000, better for large claims only, not for small claims under $5,000 which would be fully your cost.