Excess Levels

How to reduce your premium by taking a higher excess

The easiest way of reducing your unoccupied property insurance premium is to opt to accept a voluntary excess on your policy.

This voluntary excess will be applied in addition to any compulsory excess amounts, and so should be used with some caution, although the excess levels are likely to be fairly modest in comparison with the potential size of a major loss.

Voluntary excess discounts are not going to cut your premium in half however. In the unoccupied property insurance sector, the claims frequency tends to be lower than on a normal occupied household policy, whereas the severity tends to be much higher. Therefore, the insurer has far less of a saving to make on claims payments, and less to pass back to you in reduced premiums.

eg. If a £500 excess is taken on a product where the average claim is £1,000, the insurer is going to save on average 50% of its claims costs with the voluntary excess.

However, if a £500 excess is taken on a product where an average claim is £20,000, the prospect of savings for the insurer drops to just 2.5%

This is why you might be disappointed with the premium reductions being offered by insurers in this sector for voluntary excesses. They are still worth considering however.
A 5% reduction in a £1,000 premium will after all, still be sufficient to buy you a nice lunch.