How much does an excess change the price of an insurance policy?

The excess on your insurance policy is the amount you are required to pay when you make a claim, before the insurer then starts to compensate you. For example, if you are claiming for £2,000 worth of damage and your policy has a £500 excess, you are responsible for the first £500 and your insurer will cover the remaining £1,500 (assuming your claim is approved).

Most policies will have a compulsory excess, which is an amount set by the insurer, and this can vary within the policy depending on the reason for the claim. For example, our tenant insurance policy has a compulsory £100 excess for general contents and a £500 excess if the claim relates to malicious damage. There is no excess for a fatal injury claim.

Then there is a voluntary excess, where you can choose how much more you want to contribute if you have to make a claim. The lower your voluntary excess, the higher your monthly premium will be, because you are asking the insurer to pay out more. Conversely, the higher the excess you agree to pay, the less your insurer will charge you each month because:

1. they won’t have to pay out so much in case of a claim, and
2. the higher your excess, the less likely you are to make a claim at all for less costly repairs.

In terms of how much you can save on your premium, here is an example from our partners at Uinsure, for a landlord insurance policy that gives buildings (rebuild valuation £250,000) and malicious damage cover for a flat: 

You can see that agreeing to pay as much as the first £1,000 of a claim, rather than just the compulsory £100, won’t make a significant difference to your monthly costs, even though it does reduce the annual premium by 25%. So, we find that most landlords and tenants are prepared to pay a little extra each month, in return for the peace of mind that if they do have to make a claim, they won’t be hit with a big bill.

If you have any questions about insurance excess, or you would like to get a quote for your rental property, you can contact our team of experts either via our online form, or by calling 01903 890044.

And if you are a current landlord with any of the agencies in Leaders Romans Group, an insurance quote is ready and waiting for you in your online landlord account. No fuss or forms to fill out!

Bode Insurance Solutions Limited is registered in England (Company no 03101637) Registered Address: Crowthorne House, Nine Mile Ride, Wokingham, Berkshire RG40 3GZ.
Bode Insurance Solutions Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference 313541.
You may check this on the Financial Services Register by visiting the FCA’s website https://register.fca.org.uk or by contacting the FCA on 0800 111 6768