8 Considerations When Setting Your Insurance Excess

1. The two components

A compulsory excess, set by the insurer and not adjustable.

A voluntary excess, chosen by you, which is added on top.

The total is what you pay on a claim, and quotes sometimes display only one of the two.

2. How the trade works

Raising the voluntary excess reduces the premium, with diminishing returns as it climbs.

The saving is certain and annual; the cost is uncertain and occasional.

The right level is the highest amount you could pay immediately without difficulty.

Setting it beyond what you could actually find defeats the purpose of the insurance.

3. Doing the arithmetic

Compare the premium at several excess levels — most quote systems let you adjust it.

Note the annual saving between levels, and how many years of that saving the additional excess represents.

Where raising the excess by a large amount saves a small premium, it is a poor trade.

4. The knock-on effects

A higher excess makes small claims not worth making, which is partly the point and worth being deliberate about.

Not claiming preserves any no-claims discount, which has its own value.

For repairs close to the excess, paying directly is frequently cheaper overall once the premium effect of a claim is counted.

5. Where excesses differ within one policy

Home insurance frequently carries separate, higher excesses for specific perils such as subsidence or escape of water.

Motor policies may apply an additional excess for young or inexperienced drivers.

Travel policies frequently apply the excess per person per section, which multiplies quickly for a family claim.

Read the schedule rather than the headline figure.

6. Practical approach

Set the voluntary excess deliberately rather than accepting the default, which is chosen to make the quote look competitive.

Reassess it when your circumstances change.

7. Excess protection products

Some insurers sell an add-on that refunds the excess after a successful claim.

Compare the annual premium against the excess itself; where the premium is a large fraction of the amount protected, the arithmetic rarely works.

These products usually require the claim to be settled first, so you still need the money available at the time.

8. Reviewing after a claim

Insurers frequently raise the compulsory excess at renewal following a claim, which changes the calculation you made previously.

Read the renewal schedule rather than assuming the terms carried over.

This is one of several reasons to compare at every renewal rather than allowing automatic continuation.

Final Thoughts

The excess is one of the few levers on premium that is entirely yours. Set it at the highest amount you could genuinely pay without difficulty, and read the schedule for the higher excesses that apply to specific perils.