When you buy home insurance, you’ll see a figure called an ‘excess’. This is the amount you agree to pay towards any claim before your insurer steps in. It’s a crucial part of your policy, affecting both your annual premium and how much you’ll need to fork out if something goes wrong. Understanding how this excess works, and choosing the right level for you, can make a big difference to your financial peace of mind.
The total excess on your policy is usually a combination of two parts: the compulsory excess and the voluntary excess. The compulsory excess is the minimum amount your insurer requires you to pay. It’s set by the company based on factors like your property’s location, its age, and the type of risks it might face. For instance, properties in flood-prone areas or those with older, potentially more fragile structures might have a higher compulsory excess. Insurers like Aviva might set a general compulsory excess around £250, while Direct Line could offer figures as low as £150 for standard claims. However, for specialist risks like subsidence, this compulsory figure often jumps significantly, commonly to £1,000 or even £1,500 across many providers.
The voluntary excess is the extra amount you choose to pay on top of the compulsory excess. You can usually select this yourself, often ranging from £0 to £500 or more. The higher the voluntary excess you choose, the lower your annual insurance premium will typically be. For example, increasing your voluntary excess from £0 to £100 could save you around 5–10% on your premium. Opting for a water leak detector can help prevent costly claims in the first place.
It’s important to balance these savings against your ability to afford the total excess if you need to make a claim. If you have a total excess of £500, any damage costing less than that amount is completely irrelevant to your insurance policy. This means you would have to cover the full cost of repairs yourself. Here’s what you actually need to know.
If this was useful, you might also want to read Flood Insurance: Is Your UK Property at Risk and Adequately Covered?.
Understanding Your Home Insurance Excess
The term ‘excess’ in home insurance refers to the amount of money you, the policyholder, must pay towards the cost of any claim you make. It’s your contribution to the repair or replacement costs before your insurance company covers the remainder. The total excess is generally the sum of the compulsory excess and any voluntary excess you have agreed to pay. Understanding this distinction is key to managing your policy effectively and being prepared for potential claims.
What I tend to notice is that many people focus solely on lowering their annual premium without fully considering the implications of their excess. A low premium might seem attractive, but if you have a high total excess, you could face a significant bill if you need to make a claim. It’s a trade-off that needs careful thought. For instance, if you’re looking to secure your property against potential issues, a smart security camera can provide valuable evidence and deterrence.
My first move would be to calculate the total excess on my policy and then assess if I could comfortably afford to pay that amount out of my savings if an unexpected event occurred.
If this was useful, you might also want to read The Ultimate Guide to Choosing the Right Property Insurance in the UK.
Why Your Property Insurance Excess Matters
The amount of excess you have on your home insurance policy is more than just a number; it directly impacts your financial exposure when disaster strikes. Insurers use excesses to reduce the number of small, low-value claims they have to process, which helps keep premiums down for everyone. However, for the individual policyholder, it means you must be prepared to cover a portion of the repair costs yourself. This is particularly important when considering specialist risks.
For example, claims related to adverse weather events totalled £936 million in the first nine months of 2025, a 21% increase on the previous year. If your property is damaged by severe weather, your excess will apply. Similarly, the average cost of a severe subsidence claim can be up to £75,000. With compulsory excesses for subsidence often set at £1,000 or more, and flood excesses in high-risk areas potentially reaching £2,500+, the financial burden can be substantial.
What I’d consider is the specific risks associated with my property. If I lived in an area known for subsidence or flooding, I’d ensure my voluntary excess was set at a level I could manage, even with the higher compulsory excess. It’s about being realistic about potential future costs. For those in flood risk areas, understanding flood insurance is paramount.
If this was useful, you might also want to read Essential Tips for Property Insurance in Conservation Areas UK.
Common Pitfalls When Setting Your Property Insurance Excess
Many people make mistakes when deciding on their property insurance excess. These errors can lead to unexpected costs or insufficient cover when a claim is made. Understanding these common pitfalls can help you avoid them.
Focusing Solely on Premium Reduction
A significant number of policyholders prioritise lowering their annual premium above all else. While saving money is important, choosing a very low voluntary excess (or none at all) to achieve this can be a false economy. If you make a claim, the insurer only pays the claim amount minus your total excess. So, if you have a claim for £1,000 and your policy excess is £100, you will receive £900 from the insurer. However, if your excess was £500, the payout would be only £500. Approximately 8% of home insurance customers chose not to pay a voluntary excess on their buildings insurance, and 22% on their contents insurance.
Underestimating Specialist Excesses
It’s easy to overlook the fact that certain types of claims, such as those for subsidence, escape of water, or flood damage, often have separate, higher compulsory excesses. For example, subsidence excess is typically a £1,000 compulsory minimum. If you experience a burst pipe, the escape of water excess can be a separate higher excess of £350–£500. Many people assume their standard excess applies to all situations, leading to a nasty surprise when a specialist claim is made. Defaqto states that 93% of home buildings insurance policies have a subsidence excess of between £1,000 and £1,499.
Ignoring the Total Cost of a Claim
If you make a small claim for £600 and your total excess is £500, the insurer only pays £100. This means that for any claim where the total cost is less than your excess, you will receive nothing from your insurer and will have to cover the entire expense yourself. This is a crucial point: if a repair costs less than your excess, your insurance effectively doesn’t help you financially for that specific incident. What I’d do is check if any small, recurring issues might cost less than my excess, and decide if claiming is even worthwhile.
My first move would be to compare the total excess against the likely cost of common minor repairs, such as fixing a leaky tap or repairing a small section of fence, to see if claiming would be financially beneficial.
If this was useful, you might also want to read Declined Property Insurance: What UK Homeowners Can Do.
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| Voluntary Excess Level | Typical Premium Saving (vs £0 excess) | Total Outlay on £1,000 Claim (with £150 compulsory) |
|---|---|---|
| £100 | 5–10% | £250 |
| £250 | 10–20% | £400 |
| £500 | 15–30% | £650 |
Choosing Your Property Insurance Excess Wisely
Selecting the right level of excess for your property insurance is a balancing act. You need to consider the potential savings on your premium against your ability to pay the excess if you make a claim. There’s no one-size-fits-all answer, as it depends on your personal financial situation and risk tolerance.
Assess Your Financial Resilience
The most critical factor is your ability to afford the total excess amount if you need to make a claim. If you have substantial savings, you might be comfortable with a higher voluntary excess to reduce your annual premium. However, if your savings are limited, opting for a lower voluntary excess, even if it means a slightly higher premium, provides greater financial security. Consider what you could realistically pay without causing undue financial hardship. A water leak detector can offer peace of mind by alerting you to potential issues early.
Understand the Claim Scenarios
Think about the types of claims you are most likely to make and the associated excesses. For instance, if you live in a period property, you might be more concerned about subsidence claims, which carry a high compulsory excess. If you’re in an older building, understanding insurance for listed buildings is essential. Conversely, if your main concern is accidental damage from everyday life, the standard compulsory excess might be more relevant. 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.
Consider Excess Protection Insurance
Some insurers offer excess protection as an add-on to your policy. This type of insurance typically costs around £20–£50 per year and can cover the cost of your excess up to a certain limit, usually once a year. This could be a worthwhile investment if you have a high voluntary excess and are concerned about being able to pay it in the event of a claim. It effectively acts as a buffer against the financial impact of your excess. What I’d do is weigh the annual cost of excess protection against the potential savings from a higher voluntary excess.
My first move would be to get quotes for excess protection insurance and compare that cost to the premium savings I might achieve by increasing my voluntary excess.
If this was useful, you might also want to read Tips to Retain Your No-Claims Bonus on UK Property Insurance.
If this was useful, you might also want to read Building vs Contents Insurance: Which is Right for Your UK Home?.
Frequently Asked Questions About Property Insurance Excess
What is the difference between compulsory and voluntary excess? ▾
Can I choose zero voluntary excess? ▾
Does my excess apply to all types of claims? ▾
How much can I save by increasing my voluntary excess? ▾
Is excess protection insurance worth it? ▾
If this was useful, you might also want to read Property Insurance Claims Denied: A UK Homeowner’s Guide to Fighting Back.
Conclusion
Choosing the right property insurance excess is a vital step in safeguarding your home and finances. By understanding the difference between compulsory and voluntary excesses, assessing your financial resilience, and considering specialist risks, you can make an informed decision. Don’t let a desire for a lower premium lead to an unaffordable bill when you need to make a claim. A balanced approach ensures you have adequate protection without overpaying. If this was useful, you might also want to read Is Your Listed Building Properly Insured? UK Property Insurance Challenges Explained.
Sources and Further Reading
Home insurance excess explained — GoCompare provides a clear breakdown of how home insurance excesses work, including common figures and the impact on claims.
What is Buildings Insurance Excess UK 2026? — Utterly Covered offers insights into building insurance excesses, including typical amounts for various claim types and insurer examples.
Home Insurance Excess Guide — Nesto’s guide details compulsory and voluntary excesses, savings potential, and specific excesses for risks like subsidence and flood.
Understanding Home Insurance Excess. MoneyHelper, 2023.
Home Insurance Excess: What It Is and How It Works. Which?, 2023.
