Home insurance excesses explained

Home insurance follows the same principles as car insurance. Whether you own a flat, bungalow or house, it’s important you have the right protection just in case something should go wrong. Home Insurance can protect you against different types of incidents such as roof damage by natural causes, flooding, fire damage and loss of contents. 

What you pay will depend entirely on what policy you take out and the state of security at your home. Prices will vary along with what extent you’re covered for.

When taking out home insurance, you’ll need to consider two types of Excess, Compulsory and Voluntary.

What is compulsory excess on home insurance?

Compulsory excess is a pre-decided amount that you’ll need to pay if you make a house insurance claim. The amount of compulsory excess is decided by your insurance provider and will only be used if you make a claim. It’s worth noting that compulsory excesses may vary under a single policy. For example, your policy’s overall compulsory excess may be £100, but there may be a separate compulsory excess of £1,000 for subsidence. In this example, you’d have to pay £1,000 for any subsidence claim, but for any other claim only £100 would apply, unless they have an excess of their own. 

What does compulsory excess mean on home insurance?

When you make a claim the compulsory excess will be used by your insurance provider against the amount you’ve claimed. This will alter the amount of pay out you’ll get from your insurer.

For example, let’s say your compulsory excess is £200 and your voluntary excess is £0. If you make a claim for your bathroom flooding that will cost £600 to fix, your insurer will take the compulsory excess off your claimed amount. So you’ll get a total of £400 from your insurer to fix the leak.

What is voluntary excess on home insurance?

Voluntary excess works in the same way as compulsory excess but the amount you pay is chosen by you. You’ll get to decide how much you wish to pay which can be as little as zero. You may find that the more voluntary excess you pay the cheaper the overall cost of your premium. However, you’ll need to pay both voluntary and compulsory excess when you make a claim.

What does voluntary excess mean on home insurance?

Voluntary excess is paid on top of compulsory excess when you make a home insurance claim. This pre-decided amount will alter the amount of money you’ll receive for a claim.

For example, your voluntary excess is £100 and your compulsory excess is £50. You make a claim for roof damage that’ll cost £1,000 to fix. You’ll need to pay your insurer the voluntary excess, in this case £100, upfront. The insurer will then automatically deduct the compulsory excess off the original £1,000 you’ve claimed for. This means that you’ll receive £850 in total to fix your roof.

How much excess should I pay on home insurance?

The amount of excess payable on your home insurance should initially depend on how much you can afford. You should be realistic with the amount of cover you need. If you’re combining both contents and building insurance, you need to give an accurate value of your contents. 

The voluntary excess, ideally, shouldn’t be of greater value than any claim you may make. This is because it may not work out 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.

Paying annually can reduce the overall cost of your premium. This is because an insurer might only charge you for a one off admin fee, rather than the monthly admin fee plus interest if you choose to pay in instalments.

There’s a limit on how much you can claim during each insurance period but this will depend on the provider and the policy you’ve taken out.   
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