SO it is time to buy your home insurance and you come to the question of excess – what excess should I have on my home insurance? This is your guide to what you should consider and what The Property Insurer recommends as reasonable levels of excess.
Firstly, there is a perception that the higher the excess you choose, then the lower the home insurance will cost. To an extent this is right because the insurer wants to see you invested into the risk as well. But only to a certain level.
For buildings insurance typically you can choose between zero and £500 excess. Zero is not advisable as it maximises the risk for the insurer. £250 is average and a good place to be with reduction in policy price noticeable and downside risk of having to pay out the excess in balance. For every claim you make you’ll need to pay out the first £250.
That level discourages frivolous claims for blocked drains, lost keys etc., as it is cheaper to do it yourself. But if you really need to make a claim at £150,000 to rebuild your house, then it is the bargain of the century.
The Property Insurer sees very little price difference between £150 – £500 excess, so would suggest setting the excess as low as possible at the £150 mark.
The contents element of your home insurance will have separate excess. This is paid first every time you make a claim but because the cost of contents is a lot lower than buildings costs, you need to take a different view.
If a TV costs £500 to replace then a £250 excess like your buildings insurance is barely economical. If the contents of your fridge are worth £150, then a £250 excess is pointless. And you should buy insurance to protect you if you need it, not as an ornament that has too high an excess ever to use.
You can opt for zero excess on contents insurance but it will add price. In The Property Insurer’s experience, £50 is a good level as it makes the most of your insurance and keeps the cost of the policy realistic. Any higher than this and you have to question why you are buying the insurance when it can only be used on such few high price occasions. Any higher excess doesn’t result in lower policy prices by much either.
There are some items that will come with mandatory excess – like subsidence at £1000. These are not negotiable, so understand what they are and accept them. They are set after years of insurance underwriting data and are set in stone.
So we recommend £150 excess on buildings insurance and £50 excess on contents insurance. To buy the best home insurance visit www.thepropertyinsurer.co.uk.
The Property Insurer