What Is an Insurance Excess? How It Works
Last updated: June 2026 · 7 min read
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Quick Answer
An insurance excess is the fixed amount you pay towards a claim before your insurer pays the rest — the same idea as a "deductible" in the US. If you have a £150 excess and claim £600, you pay £150 and the insurer pays £450. Excess comes in two parts: a compulsory amount set by the insurer, plus an optional voluntary amount you choose. Raising your voluntary excess lowers your premium but means you pay more out of pocket on every claim.
1. How an Excess Works
The excess is your share of every claim. The insurer deducts it from any payout, or asks you to pay it directly to a repairer. Its purpose is twofold: it discourages lots of tiny claims that cost more to administer than they are worth, and it keeps premiums down by sharing risk between you and the insurer.
Worked example
Your kitchen floods and the repair costs £2,000. Your policy has a £250 excess. You pay the first £250; the insurer pays the remaining £1,750. If the same flood only caused £200 of damage — below your excess — the insurer pays nothing, and it usually is not worth claiming at all.
In the US and some other markets the same concept is called a deductible. The mechanics are identical.
2. Compulsory vs Voluntary Excess
Compulsory Excess
Set by the insurer based on the risk — your age, the item, your claims history. You cannot change it. Young or inexperienced drivers, for instance, often face higher compulsory excesses.
Voluntary Excess
An extra amount you choose to add. The more you volunteer, the lower your premium — because you are absorbing more of the risk yourself. Set it to zero if you prefer a higher premium and lower out-of-pocket cost.
Your total excess on a claim is compulsory + voluntary. If your compulsory excess is £100 and you add £150 voluntary, you pay £250 on any claim. Some policies also apply special excesses for specific risks — for example a higher flood or subsidence excess on home insurance, or a glass excess on car insurance.
4. How to Choose the Right Excess
- ✓Pick an amount you could pay today without stress. The excess is due exactly when something has gone wrong — and possibly when you have other costs too.
- ✓Match it to how often you claim. If you rarely claim and have savings, a higher excess saves money every year. If you claim more often, keep it low.
- ✓Watch stacked excesses. A combined buildings-and-contents claim, or a claim with a special flood excess, can mean you pay more than the headline figure.
- ✓Recalculate at renewal. Insurers nudge excesses up to advertise a lower premium — always check the figure before you renew.
5. Excess and Fault
For most insurance, the excess is simply deducted from your payout no matter who is at fault. Car insurance is the common exception: in a non-fault accident you usually pay your excess up front, then your insurer recovers it from the other driver's insurer and refunds it to you once liability is agreed. This is why keeping the other driver's details and clear evidence matters — it speeds up getting your excess back.
6. Frequently Asked Questions
What is an insurance excess?
It is the fixed amount you pay towards a claim before your insurer pays the rest. Claim £600 with a £150 excess and you pay £150, the insurer pays £450. It is called a deductible in some countries.
What is the difference between compulsory and voluntary excess?
Compulsory excess is set by the insurer and fixed. Voluntary excess is extra you choose to add to lower your premium. Your total on a claim is the two added together.
Should I increase my excess to lower my premium?
Only to a level you could comfortably pay at any time. A higher excess cuts your premium but is useless if you cannot afford it when you claim. £150 to £350 total is a common balance.
Do I pay the excess if the claim is not my fault?
For car insurance you usually pay it up front and your insurer recovers and refunds it from the at-fault party. For most other cover the excess is deducted from your payout regardless of fault.
Is an excess the same as a deductible?
Yes. "Excess" is the UK and Commonwealth term; "deductible" is the US term. They work the same way.
Compare cover with the excess that suits you
See how different excess levels change your premium across regulated insurers.
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