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.
60-second summaryWondering about home insurance excess? Here are your main need-to-knows:
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What does ‘excess’ mean on home insurance policies?
Home insurance excess is the amount you need to pay towards a claim before your insurance provider pays out the rest.
Excess doesn’t just apply to home insurance policies. You’ll probably have to pay it on things like car insurance and travel insurance too.
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 and can’t be changed. Not every policy has a compulsory excess, but most do.
- Voluntary excess is an amount you agree with your insurance provider. When you buy cover, you’ll usually have the option of paying a higher excess on any claim, which will often lower your premium.
You have to pay both the compulsory and voluntary excess when you make a claim. But they may be for different amounts. For example, your compulsory excess for accidental damage could be around £50 while the voluntary excess could be £250. That means you’d pay the first £300 of any claim.
How does home insurance excess work?
When you make a claim on your home insurance, the compulsory and voluntary excess will usually be deducted from your settlement.
For example:
- You want to claim £1,000 in repair costs for storm damage to your home
- The compulsory excess is £150
- Your agreed voluntary excess is £50
- So you’ll pay £200 towards the claim (£150 + £50)
- Your insurance provider will pay the remaining £800.
In some cases, you may have to pay the voluntary excess upfront, with the compulsory excess deducted from your insurance provider’s payout. And for some claims, you may need to pay both excesses upfront.
What will the excess on my home insurance be?
Compulsory excess is based on risk, and can vary between providers, policies and specific events. For example, your policy may have a storm damage excess for £100 and a subsidence excess for £1,000.
Voluntary excess is the amount you are willing to pay on top of the compulsory excess. You can vary the amount – which can alter your premium – but the options available are down to your provider. With some providers, you can opt for zero voluntary excess.
If you have combined buildings and contents cover, some insurance providers may only charge one excess if 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.
Will the excess be higher for leaks and subsidence?
Home insurance claims for subsidence and ‘escape of water’ can be very expensive. So these usually come with a higher excess.
For example:
- Most insurance providers set a compulsory excess of £1,000 or more for subsidence claims
- The compulsory excess for an escape of water claim, like a burst pipe, could be £500 or more.
Your insurance policy documents will list all this information and more. This isn’t the most exciting job in the world, but it highlights again the importance of checking your policy small print. This could save you money in the long run.
Will paying a higher voluntary excess cut the cost of my home insurance?
Agreeing to pay a higher voluntary excess may 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 were you to claim. A high excess only saves you money if you don’t claim. So, weigh it all up carefully before you decide.
And don’t forget: as well as opting to pay a higher excess, there are a number of other ways that might enable you to save on home insurance.
Can I see how the excess affects the price of home insurance?
Yes, 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’d need to pay if you had to make a claim.
Remember that you have to pay the compulsory excess, and agree a sensible voluntary excess that would allow you to be able to 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?
If you choose to pay voluntary excess, the amount you set depends how much you can afford. Ideally, it shouldn’t be more than any potential claim you may make.
Let’s say you want to claim for a broken laptop worth £400. If your compulsory and voluntary excesses add up to £400, you won’t be able to claim. You’d have to cover the cost of replacing the laptop yourself.
Do I have to pay a voluntary excess on my home insurance?
Not always. Voluntary excess is usually optional. Some insurance providers charge a compulsory excess but are happy for you to pay no voluntary excess at all.
Why is there excess on home insurance?
Excesses are there to deter people from making lots of low-value claims. Reducing ‘minor’ claims for minimal damage can help reduce overall insurance costs for everyone.
What is excess protection insurance?
Excess protection refunds the excess you’ve paid towards a claim. It’s an optional cover that can be added to your home insurance at an extra cost.
Anna McEntee – Home, travel and pet 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.