Understanding Home Insurance Excess: Fixed vs Compulsory

Every home insurance policy in the UK includes an excess — the amount you contribute towards any claim before the insurer pays the rest. Getting to grips with how excess works prevents nasty surprises when you come to make a claim.

What Is an Excess?

The excess is your financial contribution to any claim. If you claim £2,000 for flood damage and your total excess is £300, the insurer pays £1,700. Understanding the structure of your excess before buying is crucial — particularly because some policies carry multiple, compounding excess types.

Compulsory Excess

The compulsory excess (sometimes called the "mandatory" or "standard" excess) is set by the insurer and cannot be changed by the policyholder. It reflects the insurer's assessment of the minimum contribution that makes a claim viable to process. Typical compulsory excesses for home insurance range from £100 to £250 for standard claims.

However, specific claim types often carry their own higher compulsory excesses:

• Subsidence claims: typically £1,000 as standard — often the highest fixed excess in any home policy
• Escape of water claims: commonly £250–£350
• Accidental damage: usually £100–£200 if this cover is included

Voluntary Excess

The voluntary excess is an amount you choose to add on top of the compulsory excess in exchange for a lower premium. For example, adding a voluntary excess of £200 to a compulsory excess of £150 gives a total excess of £350 per claim.

Increasing the voluntary excess is one of the quickest ways to reduce a home insurance premium — typically by 5–15% per £100 added. The trade-off: you bear more risk on each claim. Only raise voluntary excess to a level you can comfortably afford to pay without financial strain.

Total Excess: The Number That Matters

When assessing a policy's true cost, always look at the total excess (compulsory + voluntary), not just the headline figure. A policy with a low premium but a £600 total excess may be less useful than a slightly pricier policy with a £200 total excess — particularly for contents claims like theft, which are often low to medium value.

Subsidence Excess: A Special Case

Subsidence is treated differently because of the potentially very high cost of claims and the difficulty in risk-selection. Most standard home insurance policies carry a £1,000 compulsory excess for subsidence claims as standard. For homes in higher-risk areas — clay soils, mining areas, properties near trees — this is worth noting when budgeting for potential claims.

Does the Excess Apply Per Claim or Per Event?

Most home insurance policies apply the excess per claim. However, if a single event (such as a storm) causes both buildings and contents damage, check whether one excess or two applies. Some combined policies treat it as one event with one excess; others apply it separately to buildings and contents elements.

Claims Below the Excess Threshold

If the value of a claim is close to or below the excess, it's worth considering not claiming. A £350 claim on a policy with a £300 excess gives you just £50 from the insurer — while potentially triggering a claims record that raises your premiums at renewal. For minor losses, self-funding and avoiding a claims history is often more cost-effective over a 3–5 year horizon.

Summary

Set your voluntary excess at the maximum you could comfortably pay in the event of a claim. Check for claim-type-specific excesses, particularly for subsidence and escape of water. And always calculate total excess, not just the voluntary portion, when comparing policies.