Thousands of people are caught out every year when making a claim on their home insurance by what’s known as the policy ‘excess’.
The excess is the first portion of any claim which must be borne by the insured, which is you, and not your insurer. Depending on what this was fixed at when you made your application, this can run into hundreds of pounds and often surprises those who haven’t paid more attention when taking out their home cover!
How excess works
When you make a claim, whether it’s on the buildings or contents element of your policy, your insurer always makes a deduction before paying out the amount you’ve claimed for.
Insurers have a set minimum that this must be, or the ‘compulsory’ excess as it’s known. This can be as little as £50 but varies depending on the insurer.
Insurers will also offer you the chance to choose a ‘voluntary’ excess, which can be up to £500 or even more. So, if £500 were the level of excess you chose and you subsequently made a claim for £600, you would receive £100.
Higher or lower excess?
It’s normally the case that the insurer will offer you lower premiums the higher the level of voluntary excess that you choose.
The choice is yours, but it’s crucial that you bear in mind you will have to fork out more for the first part of any claim you make, as it can come as a bit of a shock otherwise.
Some claims mean greater excess
Within your policy, there may be some types of claim which carry a greater level of excess than for those which would fall in to the ‘standard’ category.
Here are the types of claim these include, and the excess you would possibly be expected to pay:
- Subsidence excess – As claims for subsidence can run into thousands of pounds, insurers usually set the excess at a much higher level than for more ordinary claims, usually around £1,000.
- Accidental damage excess – A claim for accidental damage can also carry a higher excess than for a standard claim, but usually by tens of pounds rather than thousands. Escape of water excess – As water leakage within homes is quite common, insurers often stipulate a higher excess than for the voluntary/compulsory excess. Escape of water excess is commonly around £250 or more.
- Flood excess – Flooding is also becoming increasingly common, especially if you live in an area deemed to be ‘at risk’. Paying a higher excess for a flooding claim largely depends on where you live, and if you’ve made previous claims for flood damage and effects. For example, the BBC recently reported the case of a woman in Northern Ireland who was told her excess would be £10,000 for any future flood claim as she’d been flooded 3 times in the previous year! If you’ve never been flooded, you should find that it’s hardly different, if at all, to you standard excess.
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