How insurance excess works

What is insurance excess?

Insurance excess is the portion of a claim that you agree to pay yourself. When you make a successful claim, your insurer pays the remaining amount above your excess (up to your policy limit). There are two types: compulsory excess and voluntary excess.

Compulsory excess

Compulsory excess is set by the insurer and cannot be negotiated. It is based on risk factors specific to you or your policy — for example, a young or inexperienced driver may face a higher compulsory excess on a car policy. You cannot reduce compulsory excess by choosing a different amount.

Voluntary excess

Voluntary excess is an additional amount you choose to pay on top of the compulsory excess. By agreeing to pay more yourself in the event of a claim, you present a lower risk to the insurer, which typically reduces your premium. When you make a claim, both the compulsory and voluntary excess apply.

Example: Compulsory and voluntary excess together

Excess on different types of insurance

Car insurance

Car insurance excess is typically charged per claim. Young drivers, high-powered vehicles, and certain postcode areas often attract a higher compulsory excess. You can compare the cost of different voluntary excess levels with our voluntary excess calculator.

Home insurance

Buildings and contents policies usually have separate excess amounts for different types of claim (for example, subsidence claims often have a much higher compulsory excess than other claims). Always check each section of the policy wording.

Pet insurance

Pet insurance excess can be charged per claim, per condition, or per policy year — and the method matters significantly if your pet has an ongoing condition. See our guide on pet insurance excess and co-payment, or use our pet excess calculator.

Should you choose a high or low voluntary excess?

A higher voluntary excess lowers your annual premium but increases what you pay if you do claim. The right balance depends on: how often you are likely to claim; whether you could comfortably pay the excess from savings; and the size of the premium saving. Use our voluntary excess calculator to compare options over a set period.

Common mistakes to avoid

• Setting a voluntary excess higher than you could afford to pay at short notice.
• Forgetting that both compulsory and voluntary excess apply to each claim.
• Assuming excess is always charged per claim — check the policy wording for per-condition or per-year structures (especially relevant for pet insurance).
• Making a claim for an amount close to or below your total excess — you won't receive a payout and may affect your claims history.