Home insurance excess
Expert tips for understanding home insurance excesses
Compare the Market’s home and contents insurance expert, Adrian Taylor, has some tips regarding home insurance excesses:
Adrian Taylor
Executive General Manager – General Insurance
You could lower your premiums by paying a higher excess
Depending on the policy and your chosen insurance company, you may be able to lower your regular home insurance premiums by opting to pay a higher policy excess when you make a claim! This could be a good option to explore if you’re looking to lower your annual costs and you don’t mind contributing more each time you need to make a claim.
Pick an excess you can afford to pay
Don’t push your chosen excess too high if you won’t be able to afford it when you need to make a claim. Some home insurance policies let you nominate excesses of more than $1,000, but if you won’t be able to come up with that amount when you bring forward a claim, you may want to consider picking a lower excess.
Compare your options!
If your current home insurance policy isn’t as flexible as you’d like when it comes to the excess you’d pay, why not compare a range of other home insurance policies with Compare the Market? Our online home insurance comparison service makes it easy to compare, and if you find a policy you like, you can apply with us too!
Home insurance excesses explained
What is a home insurance excess?
A home insurance excess is the amount you elect to contribute if you suffer an insurable loss and need to make a home insurance claim. Depending on the claim you may need to pay this to a builder or it may be deducted from your claims settlement.
Typically, you’ll agree to a basic excess when you take out an insurance product, which is then listed on your Certificate of Insurance (COI).
How does a home insurance excess work?
When you make a home insurance claim you may need to pay your excess to your insurer before they repair and/or replace damaged items or arrange any repairs. Alternatively, your insurer may ask you to pay your policy excess to the repairer/builder.
In some cases the policy excess will be deducted from the settlement amount. For example, if your policy excess is $200, and your insured loss is $2000, you’ll insurer will cover the $1800 ($2000 less your $200 policy excess). Therefore your contribution to the loss is $200.
What types of home insurance excesses are there?
Types of excesses you could pay when claiming on your home insurance policy may include:
- Basic excess. The excess amount you agree to pay toward your insurance claim.
- Earthquake and tsunami excess. This excess may be payable for a claim due to an earthquake or tsunami.
- Unoccupied home excess. If you leave your home unoccupied for a certain period of time and you have a claim during that time, you may have to pay an additional excess.
Depending on your insurer, you may have to pay an excess if you claim on optional extras, like motor burnout and portable contents cover. Some landlord insurance benefits, such as tenant default and malicious damage, could also have additional excesses.
Always read the Product Disclosure Statement (PDS) of any home and contents cover you’re looking to purchase. This will typically provide more information on what excesses may apply to specific insured events, as well as inclusions, exclusions and other terms and conditions. The Target Market Determination (TMD) could also help you understand if the product suits you.
Home insurance costs
Does my excess amount affect how much my insurance costs?
Your chosen excess will usually affect your insurance premiums. Many insurers will allow you to choose an excess amount when you take out home insurance, and choosing a high excess may lead to a lower home insurance premium – conversely, choosing a lower excess could lead to a higher premium.
How much basic excess should I have on my home insurance?
Depending on your financial situation, opting to have a higher basic excess could be an option to lower your premium. However, it does mean you’ll pay or contribute more when you claim.
Before selecting a policy, it’s worth considering if you can afford to pay a higher excess if you need to make a claim.
Meet our home and contents insurance expert, Adrian Taylor
As the Executive General Manager of General Insurance at Compare the Market, Adrian Taylor works to make it easier for homeowners, renters and landlords to protect their home and contents. He believes it’s important for all residents (whether they rent, own or lease) to have adequate financial cover for their property and belongings in case the worse should happen.