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Home insurance explained: compulsory vs voluntary excess

Unsure what the difference is between compulsory and voluntary excess? Here’s all you need to know about home insurance policy excess.

Toy houses sit on piles of money representing home excess

What is home insurance excess?

In a nutshell, your excess is a fixed amount that you have to pay out if you make a claim on your home insurance.

Your insurer makes a deduction from the total claim, and does not pay out the full amount.

So for example, if you have an excess of £100 and you make a claim for stolen goods worth £400, your insurer will keep the first £100 and give you £300.

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What’s the difference between compulsory and voluntary excess?

There are different types of excess – a compulsory excess and a voluntary excess.

The compulsory excess, as the name suggests, is applied to every policy claim and it gets decided by your insurer. The price of this will vary but can be as low as £50.

The voluntary excess on the other hand can be chosen by you. You can pay as little as zero, and this will be on top of the compulsory excess.

Paying a higher voluntary excess could mean you pay a lower premium on your home insurance.

This is because insurers won’t have to pay as much in the event of a claim.

But it does mean that if you do claim, you’ll pay both your compulsory and voluntary excess.

For example, if you claimed for accidental damage, your compulsory excess could be £200 and the voluntary excess £200.

In which case, you could be paying £400 if you claimed.

If the claim was for £1,000, your insurer should pay £600.


Making a claim

On certain types of claims, different excesses may apply.

For example if you have accidental damage cover as part of your contents insurance policy, the compulsory excess may be higher.

On buildings insurance cover, the excess for subsidence claims is likely to be substantially higher – around £1,000 is typical.

That’s because these claims are normally for very large sums.

Your excess may also depend on the type of home insurance policy you take out.

You should check the policy before signing up to make sure you’re happy with the excesses that apply. 

If you’re thinking about claiming on your home insurance, it’s worth weighing up the numbers.

For example, a small-value claim may not see you get a lot from your insurer because you have to pay your excess. Both compulsory, and if you’ve opted for voluntary.

And your no-claims discount could also be impacted when you make a claim.

Take a look at our guide to making a home insurance claim if you need extra information.


Should I increase my voluntary excess?

Generally, insurers tend to reduce the size of your premiums if you opt for a higher voluntary excess.

This happens because it cuts the amount of money the insurer has  to pay out.

But you should always make sure you’d be able to afford both the compulsory and voluntary excess in the event of a claim.

A high voluntary excess may only save you money if you don’t end up making a claim.

You may also consider how much you’d want to claim for. Ideally, your voluntary excess should be below this figure.

This is because it may not make financial sense to claim for something that is less than or a similar cost to your voluntary and compulsory excess.

For example, if you think you’d claim for a stolen laptop that costs £500 and your compulsory excess is £100, you may want your voluntary excess to be lower than £400.

This is to ensure that you’re not paying for the whole claim yourself.


How else can I reduce the cost of my insurance?

If you don’t think having a higher voluntary excess is the right move for you, there are other ways you could lower the cost of your home insurance.

For example, paying annually instead of monthly or installing security devices could save you money.