Understanding Voluntary Excess in Home Insurance

Navigating home insurance often feels like a balancing act between monthly affordability and future financial security. A key lever in this equation is voluntary excess, a choice that can significantly lower your premiums but requires careful calculation to ensure you aren't left out of pocket during an emergency.

What is Voluntary Excess?

In home insurance, voluntary excess is an optional amount you agree to pay toward any claim, on top of the compulsory excess set by your insurer. While compulsory excess is non-negotiable and varies by claim type—such as a standard £100 for accidental damage versus up to £1,000 for subsidence—the voluntary portion is entirely your decision.

The Core Mechanism

If you set a £250 voluntary excess and your insurer has a £100 compulsory excess, you must pay the first £350 of any claim.

The Incentive

Insurers reward higher voluntary excesses with lower premiums because it signals you are less likely to make small, "frivolous" claims.

Selection Trends

Data shows that approximately 22% of customers choose to opt out of voluntary excess on contents insurance, while the average amount selected by those who do pay it is £250.

How Much Should You Pay?

The "right" amount of voluntary excess is a trade-off between immediate savings and potential future costs. According to MoneySuperMarket, increasing your voluntary excess can yield the following average annual savings.

While increasing your voluntary excess typically lowers your car insurance premium—saving an average of £11.07 for a £100 excess, £20.74 for £250, and peaking at £31.94 for £500—choosing a maximum excess of £1,000 can actually result in an average extra cost of £5.16.

Note

Savings may plateau or diminish at extreme levels depending on the insurer's risk model.

Factors to Consider Before Choosing Affordability

Only select an amount you have readily available in savings. If your total excess (compulsory + voluntary) is £500, you must be able to pay that upfront before repairs begin.

Claim Value

A high excess can make low-value claims pointless. If your total excess is £400 and you break a £400 TV, you cannot claim for it at all.

Loss of No-Claims Bonus

Even if a claim is slightly above your excess, filing it may cause you to lose your no-claims discount, which could increase your future premiums more than the payout is worth.

Excess Protection

You can purchase excess protection insurance as an add-on, which allows you to claim back your excess payment after a successful home insurance claim.

With the average combined home insurance premium sitting at £391 as of Q2 2025, every pound saved on premiums counts, but it should never come at the cost of being unable to fix your home when disaster strikes.