A guide to home insurance excess
Ever wondered what the term ‘excess’ means when it comes to home insurance? Or how much yours should be? Here’s what you need to know.
Ever wondered what the term ‘excess’ means when it comes to home insurance? Or how much yours should be? Here’s what you need to know.
What does ‘excess’ mean on home insurance policies?
You’ll usually see the term ‘excess’ mentioned on home insurance policies. An excess is the amount you need to contribute towards a claim before your insurance provider pays out. It doesn’t just apply to home insurance policies, either – you’ll probably have to pay an excess on other insurance, such as car insurance and travel insurance.
What’s the difference between compulsory and voluntary excess?
Insurance policies typically come with two types of excess:
- Compulsory excess is set by your insurance provider. Not every policy has a compulsory excess, but most do.
- Voluntary excess is a figure agreed between you and your insurance provider. When you buy cover, you’ll usually have the option of paying a higher excess on any claim.
Will paying a higher voluntary excess cut the cost of my home insurance?
Agreeing to pay a higher voluntary excess will probably result in a lower premium as you’ll pay more towards a claim.
But there’s a balance to be struck. Increasing your excess will save you money on your premium, but you don’t want to be landed with an excess you can’t afford. A high excess only saves you money if you don’t claim. So, weigh it up carefully before you decide.
As well as opting to pay a higher excess there are many other clever ways to save on home insurance.
How does home insurance excess work?
If you make a claim, your insurance provider will deduct both types of excess from any payout. Or you might have to pay the excess to your tradesman or supplier – for example, your builder.
What will the excess on my home insurance be?
Insurance providers work out compulsory excess based on the risk of a claim.
If you have both buildings and contents cover, some insurance providers may only charge one excess in the event that both your home and contents are damaged. Others might expect you to pay the excesses on both. Make sure you understand the policy terms before you buy.
You may find that different parts of your policy have different excesses. For instance, your compulsory excess for accidental damage could be around £50 while the voluntary excess could be £250. That means you’ll pay the first £300 of any claim.
Will the excess be higher for leaks and subsidence?
Claims that are typically expensive, such as subsidence, usually come with a higher excess. For example, the compulsory excess could be £1,000 with a voluntary excess of £250. That means you’d have to pay £1,250 to make a claim.
Claims for an ‘escape of water’ can carry a higher compulsory excess, too. So, for example, if a leak damages your home and your voluntary excess is £250, you’d pay £500 towards the claim.
Your insurance policy documents will list all this information and more. So, while checking policy documents isn’t the most exciting life admin task, it could save you money in the long run.
Some providers offer excess protection cover – where you pay an extra premium to cover your insurance excess (to a certain limit).
Can I see how the excess affects the price of home insurance?
You can adjust your excess when you compare quotes with us to see how it affects your premium. That way, you can weigh up potential savings against how much you’ll need to pay if you have to claim.
It’s important you understand compulsory excess and agree a sensible voluntary excess so that you can afford both.
Don’t forget that the world of home insurance is very competitive, so you can take your pick of policies. You don’t need to go with a policy with a high excess if you’d prefer a smaller one. It’s not the only thing to look at, either – price is important, but the priority is finding a policy that suits your needs.
Frequently asked questions
How much voluntary excess should I pay on home insurance?
It depends how much you can afford. But be aware that if you choose a high voluntary excess it probably means that it won’t be worth making a low-value claim. So if, for example, your £400 laptop is stolen from your home and your voluntary and compulsory excess add up to £400 or more, you’ll have to pay to replace it from your own pocket.
Do I have to pay a voluntary excess on my home insurance?
Not necessarily, no. Some insurance providers charge a compulsory excess but are happy for you to pay no voluntary excess at all.
Anna McEntee - Insurance expert
Anna’s all about delivering fantastic insurance products at a great price. Value is the most important thing for Anna, as she cuts through the jargon and finds what’s most important and worth your hard-earned money.
Rebecca Goodman - personal finance expert
Rebecca Goodman is a freelance financial journalist who specialises in insurance, personal finance and consumer affairs. Rebecca regularly writes for national newspapers including The Independent and The Mail on Sunday on a wide-range of financial topics. She covers everything from money-saving tips and holiday advice to investigations into how energy efficient appliances can cut the cost of household bills and the impact donating money can have on those in need. Along with features in national papers, Rebecca also writes news stories for websites including Yourmoney.com and The Money Edit.