How does home insurance excess work?
A home insurance excess is the amount you may need to pay towards the cost a claim. This is called an excess. Whether you’re reviewing your policy, comparing quotes or thinking about making a claim, understanding how excesses work can help avoid surprises down the track.
Find the answers to:
What is a home insurance excess?
A home insurance excess is the amount you may need to contribute towards the cost of a claim you make on your policy.
For example:
- Your home insurance excess is $800
- You have $5,000 worth of damage to your home
- You would contribute the $800 excess
- The insurer would pay the balance of $4,200, providing the damage is covered by your policy
What your insurer pays will depend on your policy, the claim circumstances, limits and exclusions.
Why do I need to pay an excess?
Excesses are a common part of insurance. In simple terms, they help balance the amount you pay for cover with the amount you might contribute, if you ever make a claim.
Choosing a higher excess may reduce your premium, but it also means you’re likely to pay more if you claim.
What should I consider when changing my excess?
If you’re choosing or changing your excess, think about what you’d be comfortable paying if something unexpected happened to your home.
Types of home insurance excesses and how they work
Before choosing or renewing your policy, it helps to understand the excesses that may apply. These can vary depending on your insurer, the type of policy you have and the claim you make.
Basic excess
This is the standard amount you may need to contribute towards the cost of a claim. It’s usually listed on your policy schedule or certificate of insurance.
Voluntary excess
Some policies may let you choose a higher voluntary excess. This may help lower your premium, but it means you may pay more if you need to make a claim.
Additional excesses
This depends on your policy, the type of claim, the event or other circumstances. If an additional amount applies to your policy, you can find it in your policy documents.
Can more than one excess apply?
If you’ve chosen any additional excesses, they will generally apply, as well as your basic excess.
How do you pay an excess?
If an excess applies, your insurer will explain what you need to pay and how the payment process works. Depending on your claim, you might pay the excess directly to the insurer or repairer, or it could be deducted from your settlement amount.
When might an excess not apply?
You won’t necessarily need to pay an excess every time you make a claim, based on your policy or the circumstances of the claim.
Let’s say your home and its contents were damaged due to a pipe bursting.
- You have home buildings insurance with an excess of $800
- And home contents insurance with an excess of $300
You generally wouldn’t need to pay both amounts, as the damage is part of the same claim. With QBE for instance, only the higher excess would apply – in this case $800.
This is different from an insurer waiving an excess. If you’re not sure, your insurer can explain what applies to your claim.
Key takeaways
Knowing how your excess works can help you better understand what costs may be involved if you need to make a claim.
Your excess amount is usually listed in your policy schedule or certificate of insurance. More than one excess may apply, depending on your policy and claim circumstances. In some cases, an excess may not apply.
Where to find out more
If you’re not sure which excess applies to your home insurance, check your policy documents before you make a claim. At the heart of it, we’re here to help make home insurance easier to understand.
