Home insurance excess: Compulsory vs voluntary explained

Home insurance excess an initial amount that you're willing to pay towards a claim, and the amount you choose impacts your home insurance price.

If you drive a car, it works in much the same way as with a car insurance policy.

Let's take a closer look at how excess on home insurance works, and the differences between voluntary and compulsory excess.

What does 'excess' mean on home insurance?

Your home insurance excess is a fixed amount that you have to pay out if you make a claim on your home insurance policy.

There are 2 types of excess:

• Voluntary excess
• Compulsory excess

When paying excess, you don't give cash to your insurance company. Instead, your insurer makes a deduction from your total payout, and sends you the rest.

For example, let's say you have an excess of £100 and you make a claim for accidental damage that's worth £1000. Your insurer keeps the first £100 and gives you £900.

What’s the difference between voluntary and compulsory excess?

Voluntary excess

This is the excess amount that you decide. You can opt to pay as little as zero, if you want, up to £400.

Compulsory excess

Compulsory excess is applied to every policy claim and it gets decided by your insurer when you first buy a home insurance policy.

The amount varies, but it can be as low as £50.

Your voluntary and compulsory excesses are added together to get your total excess. This is the total amount that gets deducted from your claim payout.

Choosing to pay a higher voluntary excess could mean your home insurance costs are lower. This is because insurers don’t have to pay as much in the event of a claim.

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

For example, if you made a home insurance claim, your compulsory excess could be £200 and the voluntary excess £200.

In which case, you'd pay £400 if you claimed. If the claim was for £1,000, your insurer should pay you £600.

When do you pay excess on home insurance?

You pay home insurance excess whenever you make a claim on your policy, no matter how small the claim is.

On certain types of claims, different excesses may apply. Your excess also depends on the type of home insurance you buy.

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

On buildings insurance cover, the excess for subsidence claims is likely to be substantially higher – around £1,000. That’s because these kinds of claims are normally for large sums.

If you’re thinking about claiming on your home insurance, it’s worth working out if it's worth it.

A small-value claim means you don't get a lot from your insurer because you have to pay your excess. And your no-claims discount is also impacted when you make a claim.

How much voluntary excess should I pay on my home insurance?

How much you pay is up to you, but you should always make sure you're able to afford both the compulsory and voluntary excess in the event of a claim.

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

Also, you want to make sure your voluntary excess is lower than how much you'd claim for. This is to ensure that you’re not paying for the whole claim yourself.

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

Is there a minimum excess on home insurance?

This depends on the specific insurer. Many home insurance companies let you put in a voluntary excess of £0.

When you compare home insurance quotes with us, we'll give you the option of selecting different voluntary excesses including:

• £0
• £150
• £250
• £400

Since your compulsory excess is set by the insurer, you don't have the option to change this. You can see a breakdown of your excess on a particular policy just beneath the price of each quote.

Does having a higher excess reduce my home insurance costs?

Paying higher excess can reduce the cost of your home insurance because the insurer has to pay out less if you make a claim.

When you compare quotes with us, you can change the level of your voluntary excess and we'll update the prices we show you. Doing this helps you gauge how much home insurance excess you're comfortable putting in.

How else can I reduce the cost of my insurance?

If you don’t want to increase your excess, there are other ways you can lower the cost of your home insurance:

• Paying annually - Monthly payments add interest, which increases the cost of your home insurance policy
• Installing security devices - This can help save money as it makes your home less prone to burglary
• Maintaining your house - This ensures your house is more resilient to storm damage and wear and tear
• Don't over insure - Knowing just how much cover you need for your contents insurance prevents you from paying for more than you need to
• Build up a no-claims discount - This shows the insurer you're lower risk

For more help, read our tips to lower your home insurance costs.