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Home insurance excess levels could be 'false economy' Go compare with our comparison table

Home insurance excess levels could be 'false economy'

15 September 2010 / by Rachael Stiles

Choosing to pay a higher excess in return for cheaper home insurance premiums might be false economy, according to

Home insurance customers often choose to pay a higher excess if they have to make a claim in order to reduce the initial cost of their home insurance policy, but research from the comparison website shows that this is not always a guaranteed money saver.

Through its research into excess levels, from £0 to £500, moneysupermarket found that overall, homeowners who opt to pay £500 excess will see a 25 per cent reduction in the annual cost of their home insurance premiums – an average of £56.

The average cost of home insurance with no excess is £220, compared to £165 for householders who agree to pay £500 excess; premiums reduce steadily, the higher the excess, but when the excess level reaches £400, the research shows that the premiums rise 11 per cent, suggesting that higher excess does not necessarily mean lower premiums.

Julie Owens, head of home insurance at, said: "Homeowners are no doubt feeling the pinch this autumn with the cost of everything from food to gas and electricity on the rise. When choosing your home cover, it may be tempting to save money by increasing your excess levels. But our research clearly shows it may not save you as much money as you thought.

"It is crucial to only set your total home insurance excess at a level you feel comfortable paying in the event of an incident as it could end up backfiring if you increase your excess to save cash in the short term, only to have to fork out more in the long run if making a claim."

Householders should also know the difference between voluntary excess and compulsory excess, moneysupermarket warns, as voluntary excess which the policyholder agrees to pay will be in addition to the compulsory excess that they are required to pay by their insurer.

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