TL;DR
Insurance excess is the amount you contribute toward each claim before your insurer pays the remainder. There are two types: compulsory excess (set by the insurer, non-negotiable) and voluntary excess (chosen by you at purchase to reduce your premium). The total excess on a claim is the sum of both. Excess applies per claim, not as an annual limit. If the cost of a repair is less than your total excess, making a claim is usually not worthwhile.
Last reviewed: June 2026
Insurance excess, sometimes called a deductible in international contexts, is a fundamental component of almost every UK insurance policy. It is the portion of a claim that you pay yourself before the insurer contributes. Understanding how excess works, how compulsory and voluntary excess interact, and when it makes financial sense to make a claim is essential for getting value from any insurance policy.
KEY FACTS
- Compulsory excess is set by the insurer and cannot be changed by the policyholder.
- Voluntary excess is chosen by the policyholder at purchase to reduce the premium.
- Total excess on a claim = compulsory excess + voluntary excess.
- Excess applies per claim event, not as an annual cap.
- Making a claim for less than the total excess is pointless: you pay the full cost yourself and may lose a no-claims discount.
- Some policies have different excess levels for different claim types (e.g. windscreen vs. accident for car insurance).
Compulsory excess explained
Compulsory excess, also called mandatory excess, is the minimum amount the insurer requires you to pay toward any claim. It is set by the insurer when the policy is issued and reflects their assessment of risk. You cannot negotiate it away or pay an additional premium to remove it. If you make a claim, the compulsory excess is deducted from any settlement regardless of the voluntary excess you have chosen.
Compulsory excess levels vary considerably by insurance type and risk profile. For car insurance, compulsory excess for a standard policy might be 100 to 250 pounds. For a young or inexperienced driver, an insurer might set compulsory excess of 500 to 1,000 pounds or more. For home insurance, compulsory excess is typically 100 to 250 pounds for buildings and contents claims. Specialist covers such as subsidence claims often carry a much higher compulsory excess, sometimes 1,000 pounds or more, reflecting the severity and investigation costs of structural claims.
The compulsory excess is disclosed in the policy schedule and the policy wording. Always read the excess section carefully when comparing policies, as a lower premium with a higher compulsory excess may not represent better value if you are likely to make a claim.
Voluntary excess explained
Voluntary excess is an additional amount you choose to pay toward each claim on top of the compulsory excess. By agreeing to contribute more to any claim yourself, you signal to the insurer that you are a lower-risk customer (less likely to make small claims) and in return you receive a lower premium. The relationship between voluntary excess and premium is not always proportional: adding 250 pounds of voluntary excess might reduce your annual premium by 50 to 150 pounds, but adding a further 250 pounds might save only an additional 20 to 50 pounds.
Voluntary excess is chosen at the point of buying or renewing a policy. Once chosen, it applies for the policy year and cannot be changed mid-term in most cases. The optimal voluntary excess is the highest amount you could comfortably afford to pay out of pocket if you had to make a claim tomorrow, minus the compulsory excess already in place.
A common mistake is to choose a very high voluntary excess to minimise the premium, then find that the total excess on a claim (compulsory plus voluntary) is so high that the insurer pays very little toward a realistic claim scenario. For example, with a 150 pound compulsory excess and 500 pound voluntary excess, a 600 pound repair would result in the insurer paying only 50 pounds while you pay 600 minus 50 = 550 pounds. At that point, whether to claim at all depends on the impact on future premiums.
How excess applies in practice
Excess applies per claim event. If you make two separate claims in the same policy year, you pay the total excess twice: once on each claim. Excess is not an annual deductible that reduces to zero after your first claim, as some policyholders mistakenly assume.
For car insurance, there are typically separate excess levels for different claim types. Windscreen claims often carry a separate, lower excess (sometimes zero for repair, around 75 pounds for replacement) than accident claims. The reason is that windscreen repairs are low-cost, frequent claims that insurers price as a separate risk. Your motor policy schedule will list the excess for each claim category separately.
When there are multiple parties to a car accident and the other party is at fault, your insurer may pay your claim in full and then recover the cost (including your excess) from the other party's insurer. In this scenario, your excess may be refunded once liability is confirmed. However, this process can take months, and you may need to pay the excess upfront before it is recovered.
Should you make a claim if the damage is close to the excess
If the cost of repair or replacement is equal to or less than your total excess, there is no financial benefit to making a claim. Your insurer pays nothing and you pay the full cost yourself, while potentially losing your no-claims discount (NCD) or having the claim recorded on your insurance history, which can increase future premiums.
The calculation is more nuanced when the repair cost exceeds the excess. You need to weigh the net settlement (claim amount minus excess) against the likely impact on future premiums from losing part or all of your NCD. For example, if a 1,000 pound claim with a 300 pound total excess nets you 700 pounds but losing two years of NCD costs you an extra 400 pounds over the following three policy years, the true net benefit of claiming is only 300 pounds.
Some insurers offer no-claims discount protection as an add-on, which allows you to make a specified number of claims (typically one or two per year) without affecting the NCD. This changes the calculation significantly: with NCD protection, making smaller claims above the excess threshold is more likely to be worthwhile.
Excess for different insurance types
Car insurance excess: typically 100 to 500 pounds compulsory for standard drivers, higher for young or high-risk drivers. Voluntary excess of 100 to 500 pounds is commonly chosen. Separate windscreen excess, usually lower.
Home insurance excess: typically 100 to 250 pounds compulsory for standard claims. Subsidence, heave and landslip claims often carry compulsory excess of 1,000 pounds or more. Voluntary excess of 100 to 500 pounds is common.
Travel insurance excess: typically 50 to 150 pounds per claim section (medical, cancellation, baggage are assessed separately). Some travel policies offer zero excess at a higher premium.
Pet insurance excess: typically a flat excess of 60 to 150 pounds per condition per year, plus a co-payment percentage (often 10 to 20 percent of the claim) that increases for older animals.
Excess reduction and protection products
Excess protection insurance is a separate policy that reimburses your excess when you make a claim on your main insurance. It is available as a standalone policy or as an add-on for car, home and travel insurance. The annual cost of excess protection is typically 20 to 50 pounds for car insurance excess protection covering up to 500 pounds per claim. Whether it is cost-effective depends on your claim frequency and the size of your excess.
Excess reduction can also be achieved through loyalty or bundling discounts from some insurers, or by demonstrating a long claim-free history. Some workplace employee benefits schemes include excess waiver products as part of the package.
Frequently asked questions
What is the difference between compulsory and voluntary excess?
Compulsory excess is set by the insurer and cannot be changed. Voluntary excess is chosen by you at purchase to reduce your premium. Your total excess on any claim is the sum of both. You cannot choose to pay only the compulsory excess if you have also agreed a voluntary excess.
Does excess apply to every claim?
Yes, excess applies per claim event. If you make two separate claims in a policy year, you pay the total excess twice. Excess is not an annual allowance that resets after you have paid it once.
Should I choose a high voluntary excess?
Only if you can comfortably afford to pay the total excess (compulsory plus voluntary) out of pocket if you had to claim tomorrow. The premium saving from a higher voluntary excess diminishes above a certain level. Do not choose a voluntary excess so high that any realistic claim would cost you almost as much to pay directly.
What happens to my no-claims discount if I make a claim?
Making a claim typically reduces or removes your no-claims discount, which can increase future premiums. If your claim amount net of excess is small relative to the likely premium increase from losing NCD, it may not be worth claiming. NCD protection add-ons allow a specified number of claims without affecting the discount.
