It’s usually a pre-agreed amount. Your insurer will then contribute the rest – up to the limit of the cover. You’ll see insurance excess on insurance products like travel, motor, home, and health.
If you’ve pranged your car or broken your phone, you may know all about insurance excess. But if you’ve never made a claim, you might not have given it much thought.
Here, we explain how it works and things to consider.
Insurance can provide financial cover if the unexpected happens and things go wrong. This may include theft, loss, injury, or accidental damage.
Some types of insurance are optional, such as life insurance, but others are required by law. For example, you need car insurance to legally drive a car in the UK.
Find out more about how much life insurance you need and what insurance you need with your mortgage.
What you can claim, and the amount, depends on the type of insurance you have and what’s in your insurance policy.
If you want to claim £1,000 on your car insurance to cover the cost of accidental damage, you’ll be expected to pay the excess, let’s say £250. The insurer will then contribute £750 if agreed in your policy.
You usually have to pay every time you make a claim, but not always. For example, if you were in a car accident that wasn’t your fault, you wouldn’t be expected to pay – or your excess would be refunded.
Some insurers may have different excess amounts under a single policy. For example, a home insurance policy may have a £100 excess for accidental damage but a £1,000 excess for claims that are likely to be more expensive, such as subsidence.
Find out more about why home insurance is important and how to compare home insurance policies.
Your policy should tell you what excess you’ll need to pay and when in the event of a claim.
There are 2 types of excess:
Compulsory excess is the amount you must pay towards an insurance claim. It’s set by the insurer when you take out the policy and can’t be changed. Compulsory excess can vary across policies from zero to over £1,000.
It can be high for certain types of insurance. For example, young drivers have a higher excess on their insurance, as they’re considered higher risk than experienced drivers.
With many policies, such as car insurance, you can choose how much excess you’re willing to pay, within a given range.
This is an optional amount you can pay towards an insurance claim on top of the compulsory excess. For example, if your policy has a compulsory excess of £150 and you add a voluntary excess of £100, you’ll need to pay £250 if you make a claim.
Increasing the voluntary excess on your insurance can be financially worthwhile in some cases. But you need to weigh up the pros and cons to help you decide if it’s the right option for you.
Adding a voluntary excess can lower the cost of your insurance premium – the amount of money you pay for an insurance policy. This is because the insurer won’t have to pay out as much in the event of a claim.
Paying a lower premium means that you could save money on your insurance. However, you should check your total insurance excess to make sure it’s an amount you feel comfortable paying if you ever need to make a claim. Don’t raise your voluntary excess beyond what you can afford to pay towards a claim.
You may not have to pay the excess upfront when making a claim – it can sometimes be deducted from the money the insurer hands over. However, you’ll still need the funds available to cover the shortfall.
Before buying any insurance product, read the policy carefully to make sure you get the cover you need.
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