What is a Voluntary Excess on Home Insurance?
Caeva O'Callaghan | March 2nd, 2022
You may have heard the term excess in relation to home insurance. but what does it mean, and what’s the difference between compulsory and voluntary?
It is an additional excess that you take on your home insurance policy which will reduce your premium. The excess is the amount you pay towards a claim before your insurance pays out.
A voluntary excess can be a good idea, but it all depends on your level of risk, how much disposable cash you need month to month, and if you foresee yourself making a claim in the near future.
In this article, we’ll answer these questions:
- What is a voluntary excess?
- Does excess apply to liability claims?
- Do I need a large or small excess on my home insurance?
Read on to find out more about home insurance excesses.
What is a voluntary excess?
As the excess is the amount you pay towards a claim before your insurance provider makes its contribution. For example if your excess is €250 and you make a claim for €1,000, your insurer will pay out €750. Think of it as the price of making a claim.
There are two types of excess, compulsory and voluntary. Compulsory is a flat fee decided by your insurance provider. You’ll be told exactly what this is when you take out your policy.
A voluntary excess, on the other hand, is an amount you can control by increasing your excess. You might want to do this because higher excess usually means a lower premium. This means if you agree to pay a bigger one-off fee in the event you make a claim, the insurance company will lower the monthly cost of your policy.
So, if you have a claim for storm damage, for example, the amount of the claim that you will have to pay will be the standard policy excess plus whatever additional voluntary excess you agreed to at the inception or renewal of your home insurance policy.
Does excess apply to liability claims?
No. Policy excesses do not apply to liability claims under your home insurance. For example, say a slate blew off your roof and hit a member of the public. An action was taken against you, which means you have to go to court. Your insurance company would look after this claim and not seek to recover an excess from you, either compulsory or voluntary.
Your insurance provider may outline other types of claim in which excess costs do not apply. For example, the provider AIG waives policy excess for the following claims:
- Loss of freezer contents – up to €1,000
- Fraudulent use of money cards – up to €1,000 (plus) or €3,000 (premium)
- Preparing new title deeds – up to €750
- Loss or damage to visitors’ property – up to €1,000 (plus) or €3,000 (premium)
- Fire brigade charges – upDo I need a large or small excess on my home insurance? to €1,500 (plus) or €2,000 (premium)
- Liability incidents
Do I need a large or small excess on my home insurance?
If you don’t plan on making a claim on your house insurance unless things go disastrously wrong, it’s a good idea to have a large excess. A large excess can help lower your premiums, meaning you’ll pay less month to month. However, if you need to make a claim you’ll end up paying a larger one-off fee.
If you think you’ll need to make more frequent, smaller claims on your home insurance, a small excess will make that more manageable.
Increasing your excess may save you money in the short term basis. But you don’t want to be landed with a huge excess if the worst happens and you can’t afford to pay.
After all, fire, flood and theft are all traumatic events. No one is pleased about having to claim on their home insurance. Being lumped with a large excess bill is an unnecessary headache that might only make things worse.
Which kind of excess you choose depends on how you live, your risk level, and how you plan on using your policy. This is why it’s always a great idea to consult a broker to find out exactly what kind of policy you need. Call us today for some friendly, expert advice. We are available online and taking calls Mon-Fri between 8.30am and 5.30pm on 0818 224433 or 042 9359051. We look forward to helping you!