A complete guide to home excess insurance
Home insurance works like car insurance, protecting your property whether it’s a flat, bungalow, or house. It covers things like roof damage, flooding, fire, or theft. Most home insurance policies include an excess, so it’s important to know what it is and how much you’ll need to pay if you make a claim.
Contents
What does excess mean within home insurance policies?
What is compulsory excess and what does it mean for home insurance?
What is voluntary excess and what does it mean for home insurance?
How much voluntary excess should I pay?
If I pay a higher voluntary excess, will my insurance premium go down?
What does excess mean within home insurance policies?
A home insurance excess is the amount you pay when you make a claim. It’s your share of the cost, and the insurer covers the rest. The amount of the excess can vary depending on your policy and the type of claim.
There are two types of excess to consider: compulsory and voluntary.
What is compulsory excess and what does it mean for home insurance?
Compulsory excess is a pre-decided amount that you’ll need to pay if you make a house insurance claim. This amount varies by policy and type of claim. For instance, while your standard compulsory excess might be £100, a separate compulsory excess of £1,000 could apply for subsidence claims, meaning you’d pay £1,000 for any subsidence-related claim, but only £100 for others unless specific excesses apply.
When you make a claim, the compulsory excess is deducted from the claim amount, reducing the payout from your insurer. For example, if your compulsory excess is £200 and voluntary excess is £0, a £600 claim for bathroom flooding would result in a payout of £400 after deducting the compulsory excess.
What is voluntary excess and what does it mean for home insurance?
Voluntary excess works in the same way as compulsory excess, but the amount you pay is chosen by you. You can decide how much you want to pay, which can be as little as zero. Typically, the more voluntary excess you choose, the cheaper your premium will be. However, when you make a claim, you’ll need to pay both the voluntary and compulsory excess.
For example, if your voluntary excess is £100 and your compulsory excess is £50, and you make a claim for roof damage that costs £1,000 to fix, you’ll need to pay the voluntary excess of £100 upfront. This means you’ll receive £850 in total to fix your roof. For some claims, you might need to pay the whole excess upfront, including the compulsory part.
How much voluntary excess should I pay?
The amount of voluntary excess you choose on your home insurance should initially depend on how much you can afford.
The voluntary excess, ideally, shouldn’t be of greater value than any claim you may make. This is because it may not be financially viable to claim for minor incidents like a television screen cracking as the combined excesses may cost you more than the television is worth. In this instance, you might be better advised just to buy a new TV and avoid claiming through your policy. This is one reason you might not want to choose a high voluntary excess.
If I pay a higher voluntary excess, will my insurance premium go down?
Yes, if you pay a higher voluntary excess on your home insurance, your insurance premium is likely to go down. This is because you’re agreeing to take on more of the cost in the event of a claim, which reduces the risk for the insurer.
However, keep in mind that if you make a claim, you’ll need to pay a larger amount upfront. It’s important to agree to a compulsory and voluntary excess total you can afford.