Home Insurance Excess Explained UK

What is home insurance excess?

Home insurance excess is the amount you pay towards any claim before your insurer covers the rest. If you have a total excess of £500 and claim for £3,000 of damage, you pay £500 and the insurer pays £2,500. Excess applies to each separate claim, not once per year.

Every home insurance policy has an excess. Understanding how it works is important because it affects both your premiums and the practical value of making a claim.

Compulsory versus voluntary excess

Compulsory excess is set by the insurer and cannot be changed. It typically ranges from £100 to £350 for standard claims, though it can be much higher for subsidence (often £1,000), flood (sometimes £2,500+), and escape of water.

Voluntary excess is an additional amount you choose to pay on top of the compulsory excess. By agreeing to a higher voluntary excess, you accept more financial risk, and in return the insurer charges a lower premium. You can usually set voluntary excess from £0 to £500 or more.

Your total excess is compulsory plus voluntary. If compulsory is £250 and voluntary is £250, your total excess is £500 per claim.

How excess affects your premiums

• Increasing voluntary excess from £0 to £100 typically saves 5–10%
• Increasing from £0 to £250 typically saves 10–20%
• Increasing from £0 to £500 typically saves 15–30%

The savings are not linear. The jump from £0 to £250 usually offers the best value. Beyond £500, additional savings become marginal while your financial exposure on each claim becomes substantial.

Choosing the right excess level

• Limited savings: Keep voluntary excess low (£0–£100) so a claim does not create financial hardship
• Comfortable emergency fund: Voluntary excess of £250–£500 often represents the best balance
• Rarely claim: A higher excess makes sense if you view insurance as protection against major events only
• High-risk area: Check compulsory excess for specific perils before adding voluntary excess — the combined total might already be very high

Special excess types to watch for

Subsidence excess: Typically £1,000 compulsory minimum, standard across the industry. Flood excess: Properties in flood-risk areas may face £1,000 to £5,000. The Flood Re scheme helps keep premiums affordable but excesses remain high. Escape of water excess: Some insurers apply a separate higher excess of £350–£500 for water damage claims.

Excess and your no-claims discount

Even when you pay the excess, making a claim usually affects your no-claims discount. The true cost of a claim is the excess plus any increase in future premiums. For smaller claims, it is often financially better to pay for repairs yourself.

Some policies offer excess protection insurance as an add-on, costing £20–£50 per year, which reimburses your excess if you claim. This can be worthwhile if you have a high total excess.

Get expert help choosing the right policy

Understanding excess is just one part of choosing the right home insurance. A specialist broker can help you balance excess levels, premium costs, and cover features. Nesto matches you with experienced home insurance brokers who can explain the options clearly and find competitive deals.