Home insurance explained

What does "excess" mean on a home insurance policy?

The excess on a home insurance policy refers to the amount you're responsible for paying towards any successful claim. For instance, if you submit a claim for £1,000 and the policy excess is £100, you'll receive only £900 from the insurance company.

Key points:

• The excess on your insurance is the amount you have to pay towards any claim.
• The compulsory excess is an amount set by your insurer and cannot be changed.
• You can opt to pay a voluntary excess too. This can result in a lower premium, but you’ll receive less money when you make a claim.
• For issues like subsidence and escape of water, the compulsory excess will usually be higher.

What’s the difference between voluntary and compulsory excess?

The compulsory excess on a policy is an amount set by your insurer. It’s what you have to pay towards any claim. Most insurers also offer you the option of adding a voluntary excess to your policy. It's an amount you agree to pay towards a claim in addition to the compulsory excess. You can choose whether you want to add a voluntary excess to your policy at the quote stage and select the amount you want to pay.

How does excess work on home insurance?

When you make a home insurance claim that’s accepted by your insurer, the excess will be deducted from your settlement. The total amount deducted will include both the compulsory excess and any voluntary excess you have chosen. For example, if you made a claim for storm damage to your roof that costs £1,000 to fix and your insurer has a compulsory excess of £150, you’d receive a payout of £850. If you’d also set a voluntary excess of £100, the payout would be reduced to £750.

How much voluntary excess should I pay on home insurance?

You do not have to opt for a voluntary excess when you take out home insurance – it’s completely optional. But many people choose to opt in as it can help bring down the cost of their premium. Deciding how much to set as your voluntary excess depends on what you could comfortably afford to pay should you have to make a claim, as well as your attitude to risk. Remember, you need to pay both the voluntary and compulsory excess in the event of a claim, so make sure you wouldn’t struggle to afford to pay the overall total.

Will having a higher excess reduce the cost of my home insurance?

Yes, opting for a higher excess typically results in a lower home insurance premium because you’re shouldering more of the risk. Insurers also factor in that, with a high excess, you’re likely to make fewer claims overall. That’s because it won’t be worth your while to claim for smaller amounts that fall below your total excess.

What is the average compulsory excess for home insurance?

There are no hard and fast rules, but you can expect insurers to charge a compulsory excess of anything between £50 to £200 or more.

Will the excess be higher for subsidence and escape of water claims?

Yes, insurers typically charge a separate compulsory excess for subsidence and escape of water claims because both have the potential to be very expensive. For subsidence, ground heave and landslip claims, insurers often impose a compulsory excess of £1,000. For escape of water claims – including things like water leaking from your washing machine, or a burst pipe – providers might charge a compulsory excess of £300 to £500 or more.

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