Confused by 'excess'?
What Is an Insurance Excess? (And How to Set Yours)
Insurance excess explained in plain English — compulsory vs voluntary, how it affects premium, and how to pick the right level.
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The two-minute version
Your excess is the amount you pay first on any claim before the insurer pays the rest. There are two types stacked together: a compulsory excess set by the insurer, plus any voluntary excess you choose at quote time.
How excess changes your premium
Raising the voluntary part lowers your premium because you absorb small claims yourself. The relationship isn't linear — diminishing returns kick in fast above $350.
- $0 → $250 voluntary: typical 8–15% premium drop.
- $250 → $500 voluntary: another 4–7%.
- $500+ : minimal further saving, higher rejection risk.
Per-peril excesses (the gotcha)
Many policies add a separate excess for specific perils like escape of water ($250–$500) or subsidence (often $1,000). These stack with the standard excess — PolicyPal lists every excess in your policy in one view.
Frequently asked
- Can I claim if the damage is less than the excess?
- Technically yes, but the insurer won't pay anything and the claim still goes on your record, raising future premiums. Almost always not worth it.
- Is the excess the same for every claim?
- No. Most home policies have higher excesses for escape of water and subsidence, and car policies usually have a higher young-driver or windscreen excess.
Your policy is the only source of truth
Stop guessing. Check your actual policy.
Generic answers don't pay claims. PolicyPal reads your policy wording in seconds and tells you, in one sentence, whether you're covered.