If you make a claim on a home insurance policy – whether it’s your buildings or contents cover – your insurer makes a deduction from the total, and does not pay out the full amount. This is know as the policy excess.
So for example if you have an excess of £100, but make a claim for stolen goods worth £400, your insurer will give you £300.
But there are different types of excess.
On both buildings and contents policies, there is typically a compulsory excess and a voluntary excess. The compulsory excess, as the phrase suggests, is applied to every claim. It may typically be around £50, but check the policy before you sign up.
The voluntary excess on your policy is up to you: it can be anything between zero (so you only pay the compulsory excess) and £400 per claim.
But insurers will generally reduce the size of your premiums if you opt for a higher voluntary excess, as this will cut the amount of money they are liable to pay out. On certain types of claim, different excesses may apply: for example if you have accidental damage cover as part of your contents policy, the compulsory excess may be higher; so might it be for damage caused by water.
On buildings cover, the excess for subsidence claims is likely to be substantially higher – around £1,000 is typical – given the fact such claims are normally for very large sums. Again, you should check the policy before signing up to make sure you’re happy with the excesses that apply.