Home Insurance Excess Guide
Last fact-checked: March 2026
Home insurance excess is the amount you pay towards any claim before your insurer covers the rest. It has two parts: compulsory excess (set by your insurer, non-negotiable) and voluntary excess (chosen by you in exchange for a lower premium). Your total excess is both figures combined. According to the Association of British Insurers (ABI), escape of water is consistently one of the most common and costly home insurance claim types in the UK – and it is exactly the risk type most likely to carry a higher compulsory excess that policyholders overlook.
Definition: Home Insurance Excess
Home insurance excess is the portion of any claim that you pay yourself, before your insurer settles the remainder. It applies separately to buildings and contents sections of a combined policy – meaning a single incident can trigger excess on both parts if both are affected. Your total excess for any claim is the sum of your compulsory excess (set by the insurer) plus any voluntary excess you have chosen to add on top.
Excess serves two purposes: it deters small, frivolous claims that would cost more to administer than they are worth, and it gives policyholders a financial stake in preventing losses. For insurers, widespread low-value claims are expensive to process relative to the payout. Excess shifts that cost back to you for minor incidents, which is why accepting a higher excess directly reduces the premium you pay.
Quick Facts: Home Insurance Excess
- ✓Your total excess is compulsory plus voluntary combined. If your insurer sets a compulsory excess of £200 and you add a voluntary excess of £150, you pay £350 on any claim before your insurer contributes anything.
- ✓Some claim types carry their own separate compulsory excess on top of the standard one. Subsidence, escape of water, and accidental damage often have higher compulsory excesses – sometimes £1,000 or more for subsidence – set out in your policy schedule.
- ✓If your claim is less than or equal to your total excess, your insurer pays nothing – and you still have a claim recorded on your policy history, which can affect future premiums. For small claims near or below the excess level, it is often better not to claim at all.
- ✓You do not pay excess when a claim is made against you by a third party and your insurer handles it on your behalf – for example, if a visitor is injured at your property. Excess applies only to claims you make for your own losses.
Key Takeaways
- →Excess is made up of two parts – compulsory (insurer-set) and voluntary (your choice) – and both are deducted from any claim payout before you receive anything
- →Choosing a higher voluntary excess reduces your annual premium, but only makes financial sense if you could genuinely afford to pay that amount after an incident
- →Certain claim types – especially subsidence and escape of water – carry their own higher compulsory excesses that are separate from the standard policy excess
- →Making a claim that turns out to be worth less than your excess still counts as a recorded claim – which can raise your future premiums even though you received no payout
- →On a combined buildings and contents policy, you may face two separate excesses if a single event damages both – check your policy schedule carefully before assuming one excess applies to everything
Understanding your excess is one of the most practical things you can do before choosing or renewing a home insurance policy. Most people focus on the annual premium and the headline cover limits – but it is the excess figure that determines what you actually receive when you claim. A policy with a low premium but a £500 compulsory excess on escape of water could leave you significantly out of pocket after a burst pipe. Getting this right is about reading your policy schedule carefully, being honest about what you can afford, and not letting an insurer or comparison site steer you towards a voluntary excess level that looks attractive as a premium discount but is financially unmanageable in practice.
This guide covers how excess works, the difference between compulsory and voluntary excess, how to calculate the right level for your situation, how excess interacts with your premium, and the claim scenarios where understanding your excess can save you money – or prevent you from making a costly mistake.
How Home Insurance Excess Works: 6 Key Points
- Your total excess = compulsory excess + voluntary excess. Both are deducted from the claim payout before you receive anything.
- Compulsory excess is set by the insurer and cannot be changed. It reflects the risk level of your property type, location, and claim type.
- Voluntary excess is your choice at the point of purchase or renewal. A higher voluntary excess reduces your premium but increases your contribution if you claim.
- Some claim types have their own separate compulsory excess. Subsidence, escape of water, and accidental damage may each have different excess levels stated in your policy schedule.
- If your claim value is less than or equal to your excess, you receive nothing. Even so, the claim is often recorded on your insurance history.
- On a combined policy, buildings and contents excess can apply separately to the same incident if both sections are affected.
MMC Home Insurance Specialists | FCA Reg. 916241
One of the most expensive mistakes we see is homeowners choosing a high voluntary excess purely to reduce the annual premium, without checking whether their compulsory excess is already high for specific risks. A policy with a £100 standard excess might carry a £1,500 compulsory excess for subsidence claims – adding £200 of voluntary excess on top then makes no meaningful difference to how the subsidence risk is handled, while creating a higher barrier for all other claims. Always read the excess schedule for each claim type, not just the headline figure on the comparison site.
What Is Home Insurance Excess?
Home insurance excess is the fixed amount you pay yourself at the start of any claim, before your insurer covers the rest. It is not an upfront payment – it is deducted from your settlement. If your total excess is £250 and the agreed settlement for a claim is £900, your insurer pays you £650. If the agreed settlement is £200, you receive nothing, and the claim may still be recorded on your policy history.
The excess figure on your policy schedule is the standard excess that applies to most claims. However, most home insurance policies also list separate excess amounts for specific claim types – typically at a higher level. These are set out in the policy schedule and policy wording. It is essential to read both before you assume you know how much your excess will be for any given event. Two other key risk management concepts also appear in your policy schedule: index-linking (where your sum insured rises annually with inflation) and underinsurance (where your sum insured falls below the actual rebuild or replacement value). Both affect how much your insurer pays on a claim – independently of your excess.
| Claim Type | Typical Standard Excess Range | Separate Compulsory Excess? | Notes |
|---|---|---|---|
| Theft and attempted theft | £100 to £250 | Usually standard | Standard excess typically applies. Check if high-value items have separate single article limits. |
| Fire, lightning, explosion | £100 to £250 | Usually standard | Standard excess applies. Major fire claims are usually well above excess levels. |
| Escape of water (burst pipes, leaks) | £250 to £500+ | Often higher separate excess | One of the most common claim types. Many policies carry a specific escape of water excess of £300 to £500 or more – even if the standard excess is lower. |
| Storm and flood damage | £100 to £350 | Usually standard | Flood-prone properties may face a higher compulsory excess or require Flood Re pooling. Check postcode-specific terms. |
| Accidental damage | £100 to £300 | Sometimes separate | Accidental damage cover is often an add-on. It may carry its own excess, and applying it to small claims is rarely cost-effective. |
| Subsidence, heave, landslip | £1,000 to £2,500+ | Always a high separate excess | Subsidence carries a mandatory separate excess that is nearly always far higher than the standard. £1,000 is typical; some policies set it at £2,500 or more. |
What Is the Difference Between Compulsory and Voluntary Excess in Home Insurance?
Compulsory excess is the minimum you must contribute to any claim, set by the insurer based on their assessment of your property and risk profile. You cannot negotiate it away. Voluntary excess is an additional amount you choose to accept on top – in exchange for a lower annual premium. Your total excess on any claim is both figures added together.
| Excess Type | Who Sets It | Can You Change It? | Typical Range | Effect on Premium |
|---|---|---|---|---|
| Compulsory excess | Your insurer | No – fixed at underwriting | £100 to £500 for standard claims. Up to £2,500+ for subsidence. | Reflected in your base premium – higher compulsory excess means lower base rate for that risk category. |
| Voluntary excess | You, at the point of purchase or renewal | Yes – you choose the level | Usually £0 to £500 in increments set by the insurer (e.g. £0 / £100 / £200 / £350 / £500). | Each increment of voluntary excess reduces the annual premium. The saving varies by insurer and risk profile. |
| Total excess (what you pay on a claim) | Combination of both | Partially – via voluntary choice | Typically £100 to £750 for standard claims. Much higher where a separate claim-type excess applies. | The total excess is what matters when you claim – make sure you can afford this figure before selecting a voluntary amount. |
A useful rule of thumb: the compulsory excess tells you what the insurer thinks the risk is worth managing at their expense. A high compulsory excess on escape of water (a very common claim) signals that the insurer prices this risk heavily and expects you to absorb more of it. You cannot change this by adjusting your voluntary excess – that only affects the overall total, not the claim-specific ones.
How Much Voluntary Excess Should I Choose on Home Insurance?
Choose the highest voluntary excess you could genuinely pay out of your own funds the day after an incident. Not the amount that would be manageable with a week to save it up, or the amount you could put on a credit card – the amount sitting in your current account. If you cannot answer that question with confidence, your voluntary excess should be £0 or as low as the insurer allows.
The premium saving from a higher voluntary excess is real, but it is often smaller than people expect once you do the maths. A £150 saving per year from choosing a £350 voluntary excess instead of £0 sounds attractive. But if you claim once in three years, the saving is £450 in premiums paid – against a £350 higher excess payment at claim time. The net gain is £100 over three years. If you claim twice in three years, you are £250 worse off. The Financial Ombudsman Service (FOS) regularly handles complaints from policyholders who chose a voluntary excess level at renewal without understanding how it would interact with their compulsory excess – resulting in a total excess far higher than expected when a claim arose.
| Voluntary Excess Level | Typical Annual Premium Saving | Break-Even Point | Best Suited To |
|---|---|---|---|
| £0 (no voluntary excess) | No saving – base premium | N/A | Households with limited savings, older or higher-risk properties, or anyone who claims frequently. |
| £100 to £200 | Typically £20 to £60 per year | 2 to 3 years without a claim to break even | A reasonable choice for most households with modest savings who want a small premium reduction without a large risk increase. |
| £250 to £350 | Typically £50 to £120 per year | 3 to 4 years without a claim to break even | Households with reliable savings of at least £500 to £600 accessible at short notice. |
| £500 | Typically £80 to £180 per year | 4 to 5 years without a claim to break even | Low-risk properties with good claims history, where the household could comfortably fund £500+ immediately after an incident. |
⚠ Check Your Total Excess Before Deciding
Before choosing any voluntary excess level, check what the compulsory excess is for each major claim type in your policy schedule. If your compulsory escape of water excess is already £350 and you add £200 voluntary excess on top, your total for a burst pipe claim is £550. That is the number that matters – not the £200 voluntary figure in isolation. Always calculate the total for the claim types most relevant to your property before committing to a voluntary excess level.
How Does Home Insurance Excess Affect My Premium?
A higher total excess reduces your premium because you are agreeing to absorb more risk yourself. Insurers price excess as a risk-sharing mechanism – the more you self-insure through a higher excess, the less exposure the insurer carries, and the lower the premium they need to charge. The saving is real but rarely transformative: most voluntary excess increments save between 5% and 15% on the annual premium.
The percentage saving from voluntary excess varies significantly depending on your risk profile and the insurer. A standard terraced house in a low-risk area may see a smaller premium reduction per pound of voluntary excess than a high-value detached property or one in a flood-prone postcode, where the insurer is more willing to discount for risk-sharing. The best way to see the actual saving is to run a quote at different voluntary excess levels on a comparison tool and compare the numbers directly.
| Scenario | Compulsory Excess | Voluntary Excess | Total Excess | Approx. Annual Premium |
|---|---|---|---|---|
| Standard buildings only policy, low risk postcode | £150 | £0 | £150 | Base rate (e.g. £180/yr) |
| Same policy, £200 voluntary added | £150 | £200 | £350 | Approx. £150/yr (-17%) |
| Same policy, £500 voluntary added | £150 | £500 | £650 | Approx. £135/yr (-25%) |
| Combined buildings and contents, higher risk property | £250 | £0 | £250 | Base rate (e.g. £380/yr) |
| Same policy, £350 voluntary added | £250 | £350 | £600 | Approx. £310/yr (-18%) |
Premium figures are illustrative examples only. Actual premiums vary by insurer, property, location, claims history, and cover level. Always compare quotes directly.
Scenario: How a £100 vs £500 Excess Affects a £1,000 Claim
| Your Total Excess | Claim Value | Your Contribution | Insurer Pays | Annual Premium Saving vs £100 | Net Position After 1 Claim |
|---|---|---|---|---|---|
| £100 | £1,000 | £100 | £900 | Baseline | £900 received |
| £250 | £1,000 | £250 | £750 | Approx. -£40/yr | £750 received. Need 3.75 claim-free years to break even on premium saving. |
| £500 | £1,000 | £500 | £500 | Approx. -£90/yr | Only £500 received. Need 4.4+ claim-free years to break even on premium saving. |
| £500 | £450 (below excess) | £450 (self-funded) | £0 | Approx. -£90/yr | Nothing received. Claim may still be recorded. Worst case outcome. |
When Do You Pay Home Insurance Excess – and When Don’t You?
You pay excess any time you make a claim for your own loss or damage under your own policy. You do not pay excess when a third party makes a claim against you and your insurer defends or settles it on your behalf. You also do not pay excess on liability claims – only on property loss and damage claims.
| Scenario | Do You Pay Excess? | Why |
|---|---|---|
| Your kitchen is flooded by a burst pipe | Yes | You are claiming for your own loss. Escape of water excess (which may be higher than standard) applies. |
| A visitor trips in your hallway and claims against you | No | This is a liability claim by a third party. Your insurer handles it on your behalf. No excess applies to you. |
| Your neighbour’s escape of water damages your property | Depends | If you claim on your own policy, your excess applies. If you successfully recover costs from your neighbour’s insurer, excess may be refunded – but not always. |
| Storm damages your roof and your garden shed | Yes – possibly twice | On a combined policy, the roof is a buildings claim and the shed may be a contents or buildings claim. Each section carries its own excess. |
| Subsidence cracks appear in your walls | Yes – at the higher subsidence excess | Subsidence carries its own separate compulsory excess – often £1,000 to £2,500. The standard excess does not apply; this higher figure does. |
| You make a claim for a loss that turns out to be below your total excess | You receive nothing, but claim is recorded | Your insurer pays nothing. However, many insurers still record this as a notified claim on your history – affecting future premiums. |
Should I Choose a High or Low Excess on Home Insurance?
A high voluntary excess makes sense when you have accessible savings to cover it, when your property is genuinely low-risk, and when you are unlikely to make small claims. It makes no sense if you would struggle to fund the excess at short notice, if your property has a history of claims, or if the premium saving is negligible relative to the increased risk you are carrying.
| Your Situation | Recommended Approach | Reason |
|---|---|---|
| Newer property, modern plumbing, no claims history, savings available | Higher voluntary excess appropriate | Low probability of claiming, stable finances. The premium saving is unlikely to be wiped out by claims over a 3 to 5 year period. |
| Older property (pre-1960), period features, aging plumbing | Lower voluntary excess recommended | Older properties claim more frequently. Escape of water and subsidence risk is statistically higher. The premium saving is likely to be eroded by claims. |
| Flood-risk postcode (Flood Re property) | Keep voluntary excess low | Flood claims are serious and expensive. The compulsory excess may already be high. Adding voluntary excess makes your total exposure very significant. |
| Good claims history, 5+ years no claims | Modest voluntary excess reasonable | Track record suggests lower probability of claiming. A moderate voluntary excess (£150 to £250) is a reasonable trade-off for the premium saving. |
| Limited savings or tight monthly budget | Minimal or zero voluntary excess | The premium saving is not worth the financial risk. If you claimed and could not fund the excess, you would either be unable to pursue the claim or forced into debt to cover it. |
| Landlord insuring a rental property | Consider specialist landlord policy excess terms | Landlord insurance excess structures differ from standard home policies. Tenant-related damage and malicious damage may carry separate higher excesses. |
How Does Excess Affect Whether I Should Make a Home Insurance Claim?
Before making any claim, compare the claim value against your total excess and the likely impact on your future premiums. For small claims only slightly above your excess, the premium increase at renewal often outweighs what you receive from the insurer. The threshold where making a claim becomes financially worthwhile is higher than most people assume.
A common scenario: your total excess is £300 and you have a claim worth £450. Your insurer pays £150. But at renewal, your premium increases by £80 per year because you have made a claim. Over three years, that is £240 in additional premiums. Your net position from claiming is a loss of £90 compared to not claiming and absorbing the £450 yourself. The maths changes significantly for larger claims – a £3,000 claim with a £300 excess generates a £2,700 payout that is rarely eroded entirely by premium increases. The key point is to run the calculation before you call your insurer.
🚫 Notifying vs Claiming: Know the Difference
Some policies require you to notify your insurer of an incident even if you choose not to make a formal claim. This notification may still be recorded on your claims history and can affect your renewal premium, even though you received no payout. Always check whether “notifying” and “claiming” are treated the same way under your policy. If they are, the decision to contact your insurer at all – even informally – can carry a premium cost.
- →Before calling your insurer, calculate: claim value minus your excess = what the insurer would pay. Is that net figure worth the premium history impact?
- →For minor accidental damage claims where the net payout would be under £200, most experienced homeowners choose to self-fund rather than claim
- →For large structural claims (subsidence, flood, major fire), always claim – the payout will far exceed any premium impact and the excess, however high
- →Keep records of what you decide and why – if an incident worsens later (hidden water damage spreading, for example), you will need to demonstrate you managed it promptly
💡 Pro Tip: Why a £500 Excess Can Cost You More Than a £100 Excess in the Long Run
This is the scenario most comparison sites do not explain. A £500 voluntary excess saves you money on paper – but it creates a hidden trap if a mid-sized claim arises.
The scenario: Your excess is £500. A claim arises worth £700. Your insurer pays £200. But you have now made a claim – and your insurer records it. At renewal, your premium rises by £80 per year for three years, adding £240 to your total insurance cost. Your net position: you received £200 from your insurer but spent £240 extra in future premiums. You are £40 worse off than if you had self-funded the £700 and kept a clean claims history.
Now compare with a £100 excess on the same claim: you receive £600, premium rises £80/yr for three years (£240 additional), net benefit is £360. The lower excess made the claim genuinely worthwhile.
The principle: A high excess does not just raise your personal contribution – it shrinks the range of claim values where making a claim makes financial sense at all. The narrower that range, the more likely you are to find yourself in the worst-case zone where you claim, receive a small payout, and still suffer the premium impact. For properties where mid-sized claims (£500 to £1,500) are realistic – aging plumbing, older kitchens, high-footfall households – a lower excess often represents better overall risk management, even though it costs more upfront.
Frequently Asked Questions
Disclaimer: This article is for information purposes only and does not constitute financial or insurance advice. Home insurance excess terms, amounts, and how they apply to specific claim types vary significantly between insurers and policies. Always read your full policy schedule and policy wording before purchasing a policy or making a claim decision. MyMoneyComparison.com is authorised and regulated by the Financial Conduct Authority (FCA Reg. 916241).
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