Row.co.uk Blog

Anyone who has ever bought an insurance policy is probably familiar with the concept of the excess on their cover - especially if they have ever had to make a claim. If you prang your car, or drop your brand new iPhone 11 down the toilet, or your boiler packs in, your excess is the first bit of your claim that you have to pay yourself.

The reason insurance companies write an excess into policies is mainly to discourage small claims which, if they were all added up, could very quickly make the business of being in insurance not very profitable at all. Insurance companies want to be there to protect you from the big stuff. If your car only needs a bit of minor body work or your iPhone is good as new with a replacement battery, you will have to pay for it yourself.

Unless, that is, you have excess insurance. Excess insurance might be thought of as insurance against your insurance. As its name suggests, it is there to cover you against the excess on standard policies. Yes it means paying twice to buy two types of cover. But the benefit is, you never have to pay out of your own pocket for claims of any size.

The excess on a standard insurance policy comes in two forms, compulsory and voluntary. Compulsory excess is the amount your insurance company states you must pay yourself towards any claim. Voluntary excess is an additional amount you can agree to pay on any claim in return for making your premium cheaper. Voluntary excess is more common with higher value policies like car insurance, home contents insurance and home emergency cover.

Let’s say you take out a home emergency policy to protect you against things like boiler breakdowns, utilities supply failures and flooding caused by plumbing problems. Your policy might say it will pay out up to £2,500 at a time to cover the cost of calling out a qualified tradesman or engineer at short notice to fix the problem, including things like parts and labour expenses. 

The compulsory excess states that you must pay out the first £250 should you ever wish to make a claim. You also opt for a voluntary excess of £150 to bring down the price a bit, meaning that you would now have to pay out to £400 yourself in the event of any incident you wanted to make a claim for.

Now if you decided you didn’t actually fancy paying this £400, you could take out excess insurance to cover it. You would still have to pay out the £400 on your first claim, but then you could make a second claim against your excess policy to get the money back. 

Is excess insurance worth it? It depends how much the policy costs. If you are using it to cover a compulsory excess only, you might think that the extra outlay per month is a good investment, especially if you are concerned about being able to pay the excess outright. If you take out a voluntary excess, you should make sure that the price of any excess insurance is less than the saving you make on your main policy premium, otherwise you’d be better off without the voluntary excess.