Confused about the ins and outs of home insurance?
We discuss the difference between compulsory and voluntary excess.

Last updated: 23/07/2020 | Estimated Reading Time: 3 minutes

Compulsory versus voluntary excess

For those who are not good with finance, the ins and outs of home insurance can be tricky to get your head round. This guide will explain the difference between compulsory and voluntary excess, helping you decide whether paying a higher excess is worth it.

In This Guide:

What is home insurance excess?

In a nutshell, home insurance excess is a set amount that you have to pay whenever you make a claim. In practice, your insurer will simply take this amount off your total claim. For example, if your excess is £200 and you make a claim for £1000, you will only receive £800.

The total of your home insurance excess is the sum of your compulsory excess, and your voluntary excess.

What is compulsory excess?

Compulsory excess is the set fee, decided by your insurer, which is applied to your policy automatically - you have no power over the amount you pay.

However, while you cannot change the amount of compulsory excess you personally are charged, the fee does vary depending on your personal circumstances and the features you’ve opted for in your home insurance policy.

What is voluntary excess?

Voluntary excess differs in that you are the one that sets the amount of excess you want to pay. When looking at your insurance quote, look at how altering your voluntary excess affects the cost of your insurance. The higher your excess is, the less you will pay for your home insurance on a monthly basis.

Therefore, it is up to you to decide how likely it is that you will need to make a claim, in order to save some cash while ensuring you are covered in an emergency. Try and find that balance between keeping your premium as low as possible, and being realistic!

Would it be worth increasing your voluntary excess?

It really depends. Increasing your voluntary excess will no doubt bring the cost of your monthly or annual premium down (in the vast majority of cases). However, there’s little point in raising the cost of your voluntary excess to the point that making a home insurance claim becomes an unaffordable endeavour. Do a bit of maths and figure out the best balance between lowering your insurance premiums, and your ability to afford to make a claim on your home insurance policy.

What is excess insurance?

Excess insurance will cover the cost of your excess in the event that you have to make a claim, up to an agreed limit. You can choose how much you excess insurance policy will cover, but keep in mind that your premiums will rise in accordance with the amount you want covered.

So, if you have decided to save money by increasing your voluntary excess, but are worried you won’t be able to foot the larger bill if you do have to claim, excess insurance may be an appealing solution. You will have to pay for your excess insurance in addition to your standard home insurance, increasing your monthly expenses, but if you do end up making a claim, this will likely be worth it.