INSURANCE GUIDE
Insurance Excess UK
What insurance excess is, how compulsory and voluntary excess works, and how to balance excess against premiums.
TL;DR
- Compulsory excess is set by the insurer and cannot be changed; voluntary excess is chosen by you.
- A higher voluntary excess reduces your premium but increases your out-of-pocket cost on each claim.
- If the claim value is close to the excess amount, it may not be worth claiming.
- Specialist excesses apply to specific claim types - flood, subsidence, or young drivers.
What Insurance Excess Is
An insurance excess (also called a deductible) is the first portion of any claim that you pay yourself before the insurer contributes. If your excess is £250 and you make a claim for £1,500 of damage, the insurer pays £1,250 and you pay £250. The excess is deducted from the claim settlement. It incentivises policyholders to avoid small claims and reduces the insurer's administrative cost for minor losses.
Compulsory vs Voluntary Excess
Compulsory excess is set by the insurer based on the risk - the age of a young driver, the flood risk of a property, or the claims history of the policyholder. You cannot reduce the compulsory excess. Voluntary excess is an amount you choose to add on top of the compulsory excess. Increasing your voluntary excess reduces your premium because you are agreeing to absorb a larger first portion of any claim. The premium saving from a higher voluntary excess is usually most cost-effective for lower-frequency risks.
How Excess Affects the Decision to Claim
If the cost of damage or loss is close to or below your total excess, making a claim may not be worthwhile. A claim on your record can affect future premiums and no-claims bonuses, even if the insurer pays very little. For example, with a £500 excess and £600 of damage, the £100 net payment from the insurer may not justify the potential premium impact. Many policyholders choose not to claim for minor losses that only marginally exceed the excess.
Specialist Excess Conditions
Some policies apply different excess levels for specific claim types. Home insurance may apply a higher excess specifically for subsidence, flood, or escape of water claims. Motor insurance often applies a separate windscreen excess lower than the main policy excess. Young driver car insurance may carry a compulsory young driver excess in addition to the standard excess. Read the policy schedule carefully to identify any specific excess conditions that apply to different claim types.
Related Guides
Disclaimer
This guide is for general information only and does not constitute financial or insurance advice. Kaeltripton.com is not regulated by the FCA. Always read policy documents in full before purchasing cover.
Frequently Asked Questions
Can I change my excess after taking out a policy?
Compulsory excess is fixed and cannot be changed by the policyholder. Voluntary excess is set at the point of purchase and typically cannot be changed mid-term without a policy amendment. At renewal, you can choose a different voluntary excess level. If you want to reduce a voluntary excess mid-term, contact your insurer - they may allow an amendment, typically with a small adjustment to the premium.
Do excess waiver products work?
Excess waiver or excess protection insurance is an add-on product that covers your excess if you make a claim on the main policy. It is sold for car insurance, home insurance, and travel insurance. The value depends on the excess level and the frequency of claims. For high excesses on policies where claims are relatively frequent, excess protection can be worthwhile. For very low-frequency risks, the excess protection premium may exceed the likely benefit over the policy period.
