Policy excess

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Your excess is the amount you agree to pay towards a claim before your insurer pays the balance, up to the policy limit. It is set out in your policy schedule and may differ between sections of cover — for example, a £250 excess on public liability but £500 on theft of tools.

Understanding excesses helps you compare quotes fairly and avoid surprises when you claim.

Compulsory vs voluntary excess

A compulsory excess is set by the insurer and applies to every claim under that section. A voluntary excess is an extra amount you choose to pay in return for a lower premium. Together they form the total excess applied to a claim.

Example: £250 compulsory plus £250 voluntary means you pay the first £500 of an accepted claim; the insurer pays the rest up to the limit.

Types of excess you may see

• Standard excess — applies to most claims under a section
• Higher excess for specific perils — subsidence, escape of water or storm damage sometimes carry larger excesses
• Age-related excess — occasionally on motor or plant policies for drivers under 25
• Nil excess — some sections (often employers liability) have no excess, but this is not universal
• Excess per claim vs per item — theft of several items might attract one excess per claim or per item depending on wording

How excess works when you claim

If a claim is accepted for £10,000 and your total excess is £500, the insurer typically pays £9,500 (minus any other deductions such as under-insurance). You pay the excess to the garage, supplier or claimant as directed, or it is deducted from the settlement. For liability claims, you may need to pay the excess upfront before the insurer completes the settlement with the injured party.

Choosing an excess level

A higher excess usually means a lower premium, but only choose a level you could afford if you had to claim tomorrow. For a small business with tight cash flow, a £1,000 voluntary excess on top of compulsory amounts might save premium but hurt when you need the policy most.

Consider:

• How often you are likely to claim (frequent small claims favour lower excesses)
• Contractual requirements — some leases or client contracts specify maximum excesses
• Whether you self-insure small losses and use insurance only for larger events

Excess and different cover types

Property, liability, PI and motor sections on one policy can each have different excesses. When comparing two quotes, check every section — a cheaper headline premium with a £2,500 water damage excess may be poor value in a flood-prone area.

Excess waivers and no-claims

Some policies offer excess waivers for an extra premium, or reduce excess after claim-free years. Terms vary widely; they are not the same as a no-claims discount on motor insurance. Read the endorsement wording carefully.

Questions about excess on a quote or renewal? Contact BIS-Nationwide and we will explain how excesses apply on your policy. For broader context see choosing business insurance and making a claim.