Quick summary
- Excess is what you pay towards a claim before the insurer pays the remainder (up to policy limits).
- Most policies have a compulsory excess; many also let you choose a voluntary excess.
- Higher excess often reduces premium, but increases your out-of-pocket cost when you claim.
- Some claims may have multiple excesses (for example escape of water + accidental damage).
- Always check if excess applies per claim, per incident, or per section of cover.
An insurance excess is the amount you contribute towards a claim. It’s one of the most important (and most misunderstood) parts of an insurance policy, because it affects whether claiming is worthwhile and how much you’ll receive.
This guide explains compulsory vs voluntary excess, how excess applies in different claim scenarios, and how to choose an excess that makes sense.
What is an excess and why it exists
An excess is designed to share risk and reduce small claims. Insurers want to discourage very low-value claims because handling claims has costs (call centre time, assessment, repairs, fraud checks).
Excess also aligns incentives: if you pay part of the cost, you may take more care to prevent loss and only claim when it is genuinely necessary.
Compulsory excess vs voluntary excess
A compulsory excess is set by the insurer and applies automatically. A voluntary excess is the extra amount you choose to pay in exchange for a lower premium. Voluntary excess can be useful if you have savings to cover small losses, but it can backfire if you choose an amount you can’t afford at the point of claim.
- Compulsory excess: fixed by the insurer (sometimes varies by risk, such as flood or subsidence).
- Voluntary excess: chosen by you to adjust price; often displayed in quote options.
- Total excess: the amount you actually pay is usually compulsory + voluntary (check wording).
How excess works in real claim examples
Understanding excess is easiest with examples. Always check whether the policy applies excess per claim and whether multiple excesses can apply.
- Example 1 (contents theft): Claim value £1,000, excess £200 → insurer pays £800.
- Example 2 (motor windscreen): Some policies have a separate windscreen excess (often lower).
- Example 3 (escape of water): You may have a higher excess for escape of water and possibly additional conditions (such as minimum temperature when away).
- Example 5 (multiple incidents): Two separate incidents usually mean two excesses, even in the same policy year.
When excess may not apply
Some benefits are provided without excess, depending on the policy. Common examples are certain emergency assistance benefits,, or legal expenses cover. However, never assume. Policies vary and insurers can change terms at renewal.
- Check each section: the schedule may show different excesses for buildings, contents, accidental damage, and add-ons.
- Look for ‘nil excess’ wording for specific benefits.
- Ask the provider to confirm in writing if it is unclear.
Choosing the right excess
A sensible excess is one you could pay quickly if you had to claim. Treat it like an emergency fund test.
Also consider the type of claims you’re more likely to make. If you have a high chance of smaller claims (for example accidental damage), a high excess could make claiming pointless.
- Set voluntary excess based on affordability, not the biggest discount.
- Check the premium saving vs the extra excess you’d pay in a claim.
- Consider separate excesses: buildings, contents, accidental damage, and specialist sections.
- If you’re financially stretched, prioritise a lower excess even if premium is higher.
Common misconceptions and mistakes
Many people focus on premium and ignore excess until a claim happens. Others think ‘excess’ means the insurer pays everything above that amount — which is broadly true, but only up to limits and subject to exclusions and conditions.
Another common issue is not realising that a claim can impact future premiums even if the insurer pays little (for example, a small claim just above the excess).
- Don’t claim for borderline values without considering premium impact.
- Don’t choose a voluntary excess you couldn’t pay at short notice.
- Don’t assume there is only one excess — check each section.
Key takeaways
- Excess is your contribution to a claim and can be compulsory, voluntary, or both.
- Higher excess can reduce but the cost of claiming.
- Excess rules vary by policy section — check the schedule carefully.
- Choose an excess you can afford quickly, not just the option that makes the quote cheapest.
- Think about claim frequency and premium impact before you claim for smaller losses.
Frequently asked questions
Do I pay excess even if I’m not at fault?
It depends on the product and circumstances. For motor, you may pay excess initially and recover it later if costs are recovered from another party. For home, ‘fault’ is usually less relevant.
Can I choose different excess amounts?
Often yes. Many policies let you choose a voluntary excess. Some sections (like escape of water) may have fixed higher excesses.
Is excess taken from the payout or paid upfront?
Either is possible. Sometimes the insurer deducts it from the settlement; for repairs you may pay the contractor directly. Check how your policy handles this.
Does a higher excess always mean a lower premium?
Usually, but not always. Pricing depends on the insurer’s model and your risk profile.
Can an insurer apply more than one excess to one claim?
Some policies can apply separate excesses where multiple sections are involved. Always check the wording.
Where to go next
- MoneyHelper on excess (external link, opens in new tab)
Anything missing from this guide? Let us know