High Home Insurance Excesses May Not Save Money

Many consumers try and reduce their home insurance costs by agreeing to a high voluntary excess, however this may not save money in the long run.

Moneysupermarket.com has undertaken research to look into the financial impact of agreeing to a high voluntary excess in exchange for a lower premium for home insurance.

The research used a range of voluntary excess levels from £0 to £500 and found that premiums did fall, as expected – from £192 to £174, or ten per cent, when comparing a £100 excess to £300.

Surprisingly, the findings showed that having an excess over £400 actually increased the premiums by over ten percent.

The problem for consumers, is that the larger the excess, the less likely they are to make a claim and in fact making a claim may be pointless in some cases where the excess is particularly high.

“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. In fact you could pay just £9 more on average for £100 voluntary excess compared to a £400 voluntary excess.”, Julie Owens, head of home insurance at moneysupermarket.com advises.

With regards to the false economy that can result from higher voluntary excesses, Ms Owens goes onto to say:

“Don’t forget that the amount of voluntary excess on a policy is the money you are willing to pay should you need to make a claim, in addition to any compulsory excesses the insurer will add and require you to pay.

Paying less for a policy by increasing your excess could be a false economy. So, if for example you had a £100 excess and a £500 claim you would pay the first £100 and the insurer the remaining £400. If you set your excess at £400 however, you would have to pay a lot more upfront. If you are looking for home insurance, make sure you look at the home insurance deal that suits your needs, and don’t just consider the cheapest price as the excesses on these premiums may be higher.”

In many cases, paying just a few pounds more will get you a much better policy with lower excesses.”