Excess, explained: how it changes your premium
The excess is the part of any claim you pay yourself. Everything above it, up to the policy limit, is the insurer’s. It is the single figure that most changes your premium, and the one most people set without thinking.
Compulsory and voluntary
Most motor and home policies have two. The compulsory excess is set by the insurer and depends on the risk: young drivers and high-value cars carry more. The voluntary excess is the extra you choose to add. The two are added together on every claim, so a $250 compulsory plus a $500 voluntary means you pay the first $750.
Why a higher excess is cheaper
Small claims cost insurers a lot to handle relative to their size. If you agree to absorb them, the insurer prices that in. Moving a voluntary excess from $0 to $500 typically cuts a motor premium by 10% to 20%.
How to pick a figure
Ask one question: if the claim happened next month, could I pay this amount without borrowing? If the answer is no, the excess is too high. A cheaper premium is no use if it makes the policy unusable.
Watch for special excesses
Home policies often carry a separate, higher excess for escape of water or subsidence. Motor policies may add an excess for windscreen claims or for named young drivers. These are in the schedule, and they apply on top of the standard figure.
When we quote, we show each option at two or three excess levels so you can see what the difference actually buys.
