What Is Home Insurance Excess?
Home insurance excess is the amount you pay towards any claim before your insurer covers the rest, made up of two parts: compulsory excess (set by the insurer and non-negotiable) and voluntary excess (an amount you choose, which lowers your premium).
Every home insurance policy has an excess. If your total excess is £350 and you claim for £2,000 of damage, your insurer pays you £1,650.
This guide explains how compulsory and voluntary excess work, how your excess level affects your premium, when it makes sense to claim, and how to choose the right level.
Home insurance excess has two parts: compulsory (set by the insurer) and voluntary (chosen by you to lower the premium). Only raise it to a level you could genuinely pay at short notice, and if the damage is only slightly above your excess, think twice before claiming, because claims sit on the CUE database for six years.
Compare home insurance quotes at different excess levels to find the right balance between premium and what you’d pay per claim.
What is the difference between compulsory and voluntary excess?
Compulsory excess is the minimum amount your insurer requires you to pay towards a claim. Voluntary excess is an additional amount you choose to add on top, which reduces your annual premium.
| Feature | Compulsory Excess | Voluntary Excess |
| Set by | Your insurer | You |
| Can you change it? | No (fixed for that policy) | Yes (choose when buying or renewing) |
| Typical range | £50 to £200+ | £100, £250, £500, or £1,000 |
| Effect on premium | None (already priced in) | Higher voluntary excess = lower premium |
| When you pay | Deducted from every claim | Deducted from every claim, on top of compulsory |
How they add up
Your total excess is the compulsory and voluntary amounts combined. If your compulsory excess is £100 and you choose £250 voluntary, your total excess is £350 per claim.
Claim-specific excess
Some policies apply different excess amounts for different claim types. Subsidence claims commonly carry a compulsory excess of £1,000, regardless of your voluntary excess choice.
Escape of water, accidental damage, and storm damage may also have separate excess levels. Your policy schedule lists the excess that applies to each type of insured event, so check your buildings and contents sections separately.
How does a higher excess affect your premium?
A higher voluntary excess reduces your premium because you are agreeing to cover a larger share of any claim yourself, lowering the insurer’s potential payout.
The trade-off
Increasing your voluntary excess from £100 to £500 typically produces a noticeable reduction in your annual premium, though the exact saving depends on your insurer and circumstances.
The saving works in your favour only if you do not need to claim. One claim at a higher excess can wipe out several years of premium savings.
Diminishing returns
The premium reduction is not proportional. Moving from £100 to £250 voluntary excess often saves more per pound of additional risk than moving from £500 to £1,000.
Under FCA pricing rules (from January 2022), renewing customers cannot be charged more than equivalent new customers. Comparing annually is still worth doing because excess structures and premium calculations vary between providers.
When do you pay your excess?
You pay your excess when you make a claim that your insurer approves, usually as a deduction from your payout rather than a separate upfront payment.
How the deduction works
If you claim for £2,000 of damage and your total excess is £350, your insurer pays you £1,650. The excess is subtracted from the settlement, not invoiced to you separately.
When you pay directly
If your insurer appoints a contractor to carry out repairs, you may be asked to pay the excess directly to the contractor. The process varies by insurer and claim type.
Multiple claims
You pay the excess each time you make a claim, even if you make more than one claim in the same policy year. Two separate events mean two separate excess payments.
Should you claim if the damage is close to your excess?
If the cost of the damage is only slightly above your excess, it may not be worth claiming because claims are recorded on the Claims and Underwriting Exchange (CUE) database for six years and can affect future premiums.
When to absorb the cost
If the repair costs less than your excess, there is nothing to claim. If the cost is only slightly above your excess, consider whether a small payout justifies having a claim on your record.
Protecting your no-claims history
Many homeowners choose to absorb minor repair costs and reserve claims for losses where the payout substantially exceeds the excess. The ABI guide to home insurance explains how your claims history affects future quotes.
Third-party fault
If another party caused the damage (a neighbour’s tree falling on your property, for example), you still pay the excess on your own policy. Your insurer may recover costs from the other party’s insurer and refund your excess, but this is not guaranteed.
Disputing a settlement
If you disagree with how your insurer has applied the excess or settled a claim, the Financial Ombudsman Service can review your complaint at no cost to you.
How do you choose the right excess level?
Choose an excess you could comfortably pay at short notice if you needed to claim, because the premium saving is meaningless if you cannot afford the excess when it matters.
Check what you can afford
Could you pay £500 or £1,000 without financial difficulty? If not, keep your voluntary excess lower even if the premium is slightly higher.
Consider your claims risk
If you live in an area with higher risk of flooding, subsidence, or theft, you may be more likely to claim. A lower excess makes more sense when the probability of needing it is higher.
Do the maths
Compare the annual premium saving from a higher excess against the additional amount you would pay if you claimed. If the saving is £30 per year but the extra excess is £400, it takes over 13 years of claim-free cover to break even.
Renters and landlords
The same excess principles apply to renters insurance and landlord insurance. Check the excess on each section of your policy, as buildings and contents may have different levels.
Frequently asked questions (FAQs)
No, the compulsory excess is set by the insurer based on their risk assessment and is non-negotiable. If you find it too high, look for a different policy or insurer that offers a lower one.
Yes, you pay the excess each time you make a claim, even if you make multiple claims in the same policy year. Two separate events mean two separate excess payments.
Most insurers do not allow mid-term changes to your excess. You would typically need to wait until renewal to adjust it, as a mid-term change often requires cancelling and reissuing the policy.
It can, as some policies apply a different (sometimes higher) excess for accidental damage claims than for other claim types. Check your policy schedule for the specific amounts.
You still pay the excess on your own policy. Your insurer may recover costs from the responsible party’s insurer and refund your excess, but this is not guaranteed and can take time.
Almost always. Most policies apply a compulsory subsidence excess of £1,000, which is separate from and usually higher than the standard compulsory excess on your policy.
Yes, renters insurance works the same way as any other contents policy when it comes to excess. You pay the total excess (compulsory plus voluntary) towards each claim.