Policy excess
Policy excess explained: what is a policy excess?
A policy excess is the amount an insured has to bear on each claim before the insurer's liability begins, normally made up of a compulsory excess set by the insurer plus any voluntary excess the customer chose to add. It is the standard UK and Commonwealth term for the mechanism American policies call a deductible.
For insurers
See the damage before you send anyone
Venta Capture, a product of VentaVid, sends the policyholder a link. They film the damage on their own phone, guided step by step, and the evidence lands with the claim.
Treat the two words as synonyms of one another, because that is what they are. A US customer reading a UK policy and a UK customer reading a US comparison table are looking at the same clause under two different names.
Compulsory excess versus voluntary excess
Almost every retail motor and home policy carries both, and they stack.
- Compulsory excess: imposed by the insurer as a condition of cover and not removable by the customer. It is rated off risk factors: driver age, licence held, claims history, vehicle group, property type. A young or newly licensed driver sees a much larger one, and that is underwriting, not a penalty for the current claim.
- Voluntary excess: chosen by the customer at quotation to reduce the premium. It is the lever price comparison sites push hardest, and the one customers forget fastest.
- Additional or peril-specific excesses: separate figures that bite only on certain claim types, most commonly windscreen and glass, escape of water, subsidence, or a named-driver condition.
The two are added together on a claim. A customer with a compulsory excess of £250 and a voluntary excess of £300 has a total excess of £550, even though only one of those numbers was ever a decision they made.
How is a policy excess applied to a claim?
The excess is deducted from the settlement, not invoiced separately. Where the insurer settles directly with an approved repairer, the customer usually pays the excess to the repairer on collection and the insurer pays the balance. Where the insurer pays the customer, the figure simply comes off the cheque.
Nothing about that changes the claim's validity. An excess of £550 against a £480 repair does not mean the claim is refused. It means the customer carries the cost and, in most cases, decides not to notify at all.
Policy excess example: a £2,400 repair
A driver reverses into a bollard. The approved repairer quotes £2,400. Compulsory excess is £250, voluntary excess is £300, so the customer pays £550 to the repairer and the insurer settles £1,850. The no-claims discount is also affected, because the claim is fault.
Change one fact and the picture inverts. If another driver had hit them and liability were admitted, the claim can be presented to the other insurer instead, the customer's excess is recovered as part of the loss, and the discount survives. Same damage, same repairer, different route, different amount out of the customer's pocket.
When does the excess not apply, or come back?
- Non-fault claims with recovery: where the insurer recovers in full from a liable third party, the excess is normally refunded to the insured. It is often paid out and returned later, which is worth saying at notification.
- Windscreen repair rather than replacement: many policies apply a lower excess, or none, to a chip repair while charging a full glass excess on replacement.
- Approved repairer routes: some policies reduce the excess where the insurer's network handles the work.
- Excess protection add-ons: a separate purchased product that reimburses the excess after a claim. It does not remove the excess from the policy, it refunds it, and the customer still funds it first.
What the excess never does is protect a no-claims discount. Those are two separate things sold on the same page, and conflating them causes more complaints than either one alone.
Excess and deductible: one mechanism, two names
The equivalence is close to exact. Both are set at underwriting, both are applied per claim, both trade premium against retained risk, and both are the customer's own money. Two differences are worth knowing.
- The split into compulsory and voluntary is a UK market convention. US personal lines usually present a single chosen deductible, with no insurer-imposed floor stated separately.
- Percentage-based retentions are far more common in the US, particularly for catastrophe perils. The Insurance Information Institute puts hurricane deductibles at 1 percent to 5 percent of a home's insured value across nineteen states plus the District of Columbia, and earthquake deductibles at 2 percent to 20 percent. UK household policies typically use flat sums.
In reinsurance and commercial lines the vocabulary shifts again, where "retention" and "self-insured retention" describe the same idea at a different scale.
What claims staff get asked most
Three questions come up on nearly every notification. Why is it higher than I remember (a voluntary excess chosen at renewal, or a compulsory excess rerated). Do I pay it to you (no, normally to the repairer). Will I get it back (only where the loss is recovered from someone else).
Answering all three at first contact removes a chunk of downstream churn. The intake stage is covered in first notification of loss, the evidence side in insurance claim documentation, and the effect of unanswered questions on elapsed time in claims cycle time.
