When you take out home insurance, one of the things you'll come across is excess. This is the amount you contribute towards the cost of a claim before your insurer pays the rest.

There are two types of home insurance excess: compulsory excess and voluntary excess. This guide explains the difference between the two, when you pay it and how to choose the right amount.

Key takeaways

• Your total excess is made up of two parts: a compulsory amount set by your insurer, and a voluntary amount you choose yourself.
• You pay your excess when you make a claim, not upfront when you take out your policy.
• A higher voluntary excess can reduce your monthly payments, but it means paying more if and when you need to make a claim.

What is excess on home insurance?

Excess is the amount you agree to pay towards a claim before your insurer covers the rest.

For example, if you make a claim for £1,000 worth of damage and your total excess is £300, your insurer pays £700 and you pay £300.

In North America the excess is known as the 'deductible'.

There are two types of excess on a home insurance policy: compulsory and voluntary. Your total excess is the sum of both.

What is compulsory excess on home insurance?

Compulsory excess is the minimum amount your insurer requires you to pay towards a claim. You can't change or remove it. It's set when you buy your policy and applies to every claim you make.

The amount can vary depending on the type of claim. Escape of water claims (such as a burst pipe) and subsidence claims, for example, often carry a higher compulsory excess than standard claims. This reflects the greater cost and complexity involved in these types of claim.

Compulsory excess exists because it encourages policyholders to take reasonable care of their property, and helps insurers avoid a high volume of small claims.

What is voluntary excess on home insurance?

Voluntary excess is the additional amount you choose to pay on top of your compulsory excess. You set it yourself when you get a quote.

The higher your voluntary excess, the lower your monthly or annual payments tend to be. That's because you're taking on more of the financial risk yourself, so the insurer charges you less.

But if something does go wrong, you'll need to be able to cover that amount at the time of the claim.

What is the difference between compulsory and voluntary excess on home insurance?

Compulsory excess is fixed by your insurer and you can't change it. Voluntary excess is your choice.

Here's a quick comparison:

• Compulsory excess: set by the insurer, non-negotiable.
• Voluntary excess: set by you, adjustable at the quote stage, paid on top of compulsory excess.
• Total excess: compulsory + voluntary. This is the amount you'll pay towards any claim.

When do you pay excess on home insurance?

You pay your excess if and when you make a claim, not when you buy your policy.

In practice, your excess is usually deducted from the claim payout. So if your insurer settles a £2,000 claim and your total excess is £400, you'll receive £1,600.

In some cases, such as repairs carried out directly by a third party, you may need to pay your excess separately.

It's worth noting that some claim types carry a different compulsory excess. If you're unsure how much you'd pay for different claim types, check your policy documents or contact your insurer before you claim.

How much voluntary excess should I choose?

There's no single right answer. The best voluntary excess for you depends on your personal circumstances. A few things to consider:

• Your savings buffer: only choose a voluntary excess you could pay if you needed to claim. If a large excess would put you under financial pressure, consider a lower amount.
• Your claim likelihood: if your home has older fixtures, is in an area prone to flooding, or has had previous claims, a lower excess might give you more peace of mind.
• The payment saving: weigh up how much a higher excess actually reduces your payments. If the saving is modest, a lower excess may be the more sensible choice.
• Your policy type: if you have both buildings and contents insurance, check whether each carries a separate excess. The amounts can differ.

A higher voluntary excess is often worth considering if you have a solid savings buffer and wouldn't claim for smaller incidents. But it's always a balance between reducing your payments now and being prepared if something goes wrong.

Home insurance from Marshmallow

At Marshmallow, we offer home insurance designed with UK newcomers in mind. Whether you're renting or own your home, we can help protect what's important to you without breaking the bank.

To see what you could save, find out more about our home insurance or get a free quote today.

Frequently asked questions

Is the excess the same for buildings and contents claims?

Not always. Some insurers apply a different compulsory excess to different claim types, and buildings and contents policies can carry separate excesses. Check your policy documents to confirm.

Can I change my voluntary excess after buying a policy?

In most cases, you can only set your voluntary excess at the quote stage. Once your policy is active, you'd typically need to wait until renewal to change it. Check with your insurer if you're unsure.

Do I pay excess if a claim isn't my fault?

Usually, yes. Excess applies to most home insurance claims regardless of fault. However, if a third party is found liable for the damage, you may be able to recover your excess from them or their insurer.

Does making a claim affect my No Claims Discount?

It can. Making a claim on your home insurance may affect the price you pay at renewal, even if you have a No Claims Discount. The impact will depend on your insurer's terms and how the claim is settled.

Does excess work the same for car insurance?

Voluntary and compulsory excess on car insurance works in the same way. Although excess protection is a common add-on to car insurance policies.