Home insurance excess explained

What does voluntary and compulsory excess mean on your home insurance? And what effect does increasing your excess have on premiums? Read on to find out.

Eve Powell
Eve Powell
Updated 16 November 2021  | 3 min read

What does excess mean on a home insurance policy?

Your home insurance excess is a set amount you’ll need to pay towards a claim.

When you make a successful claim, your insurer will deduct your excess from the sum of money it pays you.

For example, if your policy excess was £250 and your claim was for a £600 television, you’d receive £350 towards the cost of replacing it.

Charging an excess protects insurers by deterring people from making false or low-value claims.

How much your excess will be depends on your policy, the amount of cover you need, what you’re claiming for and how secure your home is.

Key points

  • The excess on your insurance is a set amount that’s deducted from any payout
  • The compulsory excess is set by your insurer and is non-negotiable
  • Paying a voluntary excess can lower your premiums, but you’ll receive less money when you make a claim
  • For issues like subsidence and escape of water, the excess will be much higher
  • Check your policy before you buy cover, so you’re aware of what you might need to pay

What’s the difference between voluntary and compulsory excess?

Voluntary excess is an amount you set that you’ll pay on a claim. This can be as low as zero, which reduces how much you’ll need to pay when you make a claim. Or you can increase it so that you’ll pay this on top of your compulsory excess, which may reduce your premium.

Compulsory excess is the amount set by your home insurance provider and is non-negotiable. Depending on the insurer, this amount can be as low as £50. But for issues that are usually expensive to repair or resolve, the excess for these could be much higher.

How high should I set my excess on my home insurance?

There are two main types of home insurance - buildings and contents - and this cover helps to protect you against unexpected events like loss, damage, or theft.

When you’re looking at setting your excess you need to think about what you could afford if you made a claim and had to pay to repair damage to your home or replace its contents.

If you choose to have a high level of excess, you’ll receive less from your insurer to cover the costs, which is something you should consider.

Will having a higher excess reduce the cost of my premium?

Yes, choosing to have a higher excess will normally make your premiums lower.

This means you’ll pay less over a year, but it may only save you money if you don’t make a claim.

When deciding on your excess, you need to balance any reduced premium with how much you’d be able to pay if you made a claim.

You may even be put off making a claim if you can’t afford to cover the costs once your higher insurance excess has been deducted.

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

Most home insurers will cover subsidence as standard (unless you’ve had issues with subsidence in the past). This is when the foundations of a home shift and cause structural damage.

As this issue can be hard to fix and very expensive to sort out, home insurers generally have an excess of around £1,000 or more for a subsidence claim.

Water leaking and causing damage in a home is very common and the compulsory excess for these claims will often be around £300, which is higher than normal.

It’s a good idea to check the excesses on your insurance policy before you take out cover.

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^Up to £250 refunded after claim settled. Excludes accidental loss or damage claims. Full T&Cs apply.

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