Home Insurance Excess

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What’s home insurance?

What does ‘excess’ in home insurance mean?

How does home insurance excess work?

What are the different types of home insurance excess?

Does my excess amount change how much I pay?

How do I know what the right excess is for my policy?

Can I change my excess later?

Do I pay an excess every time I claim?

Make an excess work for you

Long story short

Your excess is your up-front payment when making a claim

It’s the bit you pay if you make a claim. Then your insurer chips in the rest of the repair or replacement cost.

Your excess is all about balancing risk and reward

A higher excess lowers premiums but typically increases out-of-pocket costs if the customer needs to make a claim, while a lower excess means higher premiums but less to pay at claim time.

There are different types of home insurance excesses

Aside from the basic excess that you pay for each claim, you might also find additional excesses for things like motor burnout, unoccupied homes, and earthquakes.

What’s home insurance?

Home insurance jumps into action when you find yourself (and your home) in an unfortunate, unexpected situation. We’re talking about fires, break-ins, wild weather, or even little accidents. Taking out home insurance is about hopefully saving you a mountain of cash (and stress) if something goes wrong. 

Now when you think about home insurance, you might picture a single product. It is, but it’s also often used like a blanket term that insures your house, your stuff, or both when damaged by defined events. Whether you’re a homeowner, landlord, or renter, home insurance has your back when life throws a curveball.  

Here’s the breakdown of the types of home insurance to help you figure out which are relevant to you. 

Combined home and contents insurance

Think of this as the ultimate all-in-one package. A combined home and contents insurance policy bundles protection both for your house AND the stuff inside it.  

It covers your home’s structure – like the walls, roof, and even outdoor sheds – and your belongings, from your lounge to your big-screen TV, even that fancy coffee machine you love. This type of combined home insurance works like a safety net for (almost) your entire setup. 

Building insurance

If you’ve just braved through a freak hailstorm and your roof is in tatters, this type of home insurance protects your home’s structure and other permanent fixtures. Building insurance steps in to cover the costs of repairing or rebuilding your home when it’s damaged by insured events like storms and fires.  

Sometimes called ‘home insurance’ or ‘home building insurance’, this coverage includes your walls, roof, built-in cabinets, and even your garage or outdoor decking. Imagine flipping your house upside down – anything that stays put is what building insurance typically covers.  

Contents insurance

Got a couch that’s been with you through thick and thin? Or a laptop that’s your lifeline for work and play? That’s where contents insurance comes in.  

This type of insurance is what renters can get if they just want protection for their belongings. It is also suitable for homeowners who live in a shared complex like an apartment, townhouse or unit where their body corporate fees include strata insurance.

Contents insurance can help cover things like your favourite gadgets to furniture, clothes, and even kitchen appliances. If you’d like extra coverage for things you take outside the home – like your smartphone or camera – you may also need to look for policies that offer portable contents cover on top of contents insurance.  

Landlord insurance

Are you renting out your property? Then landlord insurance might be the hero you didn’t know you needed. It protects you against unique risks that come with being the legend of a landlord you are. It can include coverage for certain types of tenant damage, missed rent payments, and even legal costs if things go sideways.  

If you own a rental property, then getting this optional cover could save you a lot of stress and money in the long run. Heads up: If your tenants have done a number on you and you are making multiple claims, depending on your policy and provider, you may have to pay an excess for each separate insured event (i.e. an excess for rent default and an additional excess for malicious damage caused by renters.)  

What does ‘excess’ in home insurance mean?

If something unfortunate happens (what insurers call ‘insured, listed or defined events’) and you need to claim your home insurance, the excess is your contribution toward that claim. It’s a set amount you agree to pay when you take out your policy. And you can find this dollar figure right on your Certificate of Insurance (COI).   

There are different ways you can pay the excess. You can pay the excess amount directly to the insurer before they finalise your claim. Some insurers also deduct the excess amount from your payout. 

Now, excess isn’t just a random number tossed into your policy for fun. It actually plays an important part.  

For starters, having an excess can help keep your premiums – that regular amount you pay monthly or annually for your insurance – a bit more under control. If you’re looking to pay less each month, you can bump up your excess. The important bit here is making sure it’s an amount you’d be comfortable paying if you ever need to make a claim. You wouldn’t want to get caught out and realise you can’t cover your excess if something does go wrong! 

Plus, having an excess could mean you’re not as likely to go claiming for every little thing – like small repairs you’d probably just fix yourself if the cost of repair is less than your excess amount.   

How does home insurance excess work?

So let’s paint a scenario of if you unfortunately have to make a claim (and pay excess).  

You’ve left the house for a cheeky weekend away, only to come home and find a pipe’s burst and flooded your laundry. The clean-up and repairs set you back $3,000. Since your policy excess is $700, you pay that bit yourself, and your insurer chips in the other $2,300.

‘Let me tell you about a claim we had to make not long ago when our ceiling copped it. We had one of those classic wild, windy days and water sneaked in through the roof. The next thing we know, our pristine white ceiling was covered in stains.

Turns out getting it sorted was going to set us back $4,000. So we decided to make a claim.

Because we’d picked a $2,000 excess, you can look at it this way: we paid half that bill, and the insurer took care of the rest. Not ideal (I mean, it’s still a couple of grand), but way better than coughing up the whole lot ourselves!

My favourite bit is that our insurer sorted the inspector and tradies for us – so instead of chasing plasterers and sparkies ourselves, we just dealt with one point of contact. Made the whole saga a heap easier.’

Tina Sendin
Digital Writer, iSelect

What are the different types of home insurance excess?

It’s worth having a good look at your home insurance policy because there can be a few different types of excesses depending on what’s happened. Here are some you might come across:

Basic excess

This is the standard amount you pay each time you make a claim.  The actual amount will vary depending on both your policy and the excess amount you’ve chosen.

Earthquake or tsunami excess

Sometimes there’s an extra charge if there’s been a big shake or a wave.

Unoccupied home excess

If your place has been left empty for a while, you might have a higher excess if you need to claim. 

Excess applied to optional covers

If you’ve added optional covers for motor burnout or portable items, there could be a separate excess for those extras, depending on who you’re insured with.

So, don’t just take a quick peek at your policy. It makes sense to give the product disclosure statement (PDS) a good once-over. That’s where you’ll find all the details on what excesses could crop up for different sorts of claims, plus what’s included, what’s not, and all the finer points.  

Does my excess amount change how much I pay?

Yes. As explained earlier, there’s a bit of a trade-off at play. 

If you choose a higher excess, your premiums will likely drop. Maybe it’s the insurer’s way of rewarding you for taking on more risk. *wink wink* 

On the flip side, a lower excess generally means higher premiums. But this means you’ve got a lower out-of-pocket cost to worry about if you need to claim.   

How do I know what the right excess is for my policy?

This is one of those questions only you can answer. The key thing to remember is that your excess is all about balancing risk versus reward – how much you want to pay each month versus what you’d be comfortable coughing up if you ever need to make a claim.  

Here’s what you can weigh up:

Budget

Can you realistically set aside $1,000 or more for a claim if you choose a higher excess? If not, a lower excess might be the safer option for you.  

Risk of claiming

If you live in a disaster-prone area or have had to claim a lot in the past, opting for a lower excess could save you stress when claims roll in (again).

Claim history

If you’ve been fortunate enough to not be in the habit of making regular claims (on ya!), then a higher excess could save you money in premiums over time. Just make sure you can afford it if you (finally) find yourself in a hairy situation (hope not!). 

Helpful tip

If replacing household items is manageable on your income, a higher excess could save you money on premiums. But if cash flow is tight, you might want to stick to a lower excess for fewer out-of-pocket surprises. Choose an excess amount that strikes the balance between affordable premiums and manageable costs when it really counts. 

Now life changes can shift what ‘manageable’ means. Reassess your excess with every big shift – a new baby, new income, or even settling into a new house. It’s worth checking with your insurer if you can change your excess halfway through the year, or if you need to wait for renewal time. 

Adrian Bennett

General Manager for General Insurance

Can I change my excess later?

Yes, most insurers will allow you to adjust your excess if you’re looking to juggle your premium costs or finances.  

You might want to check with your insurer though as some let you change your excess at any time, while others have certain conditions. For instance, some insurers allow you to increase your excess anytime (as long as you don’t have any pending claims), but you can only decrease it when your policy’s up for renewal.  

Or you can compare a range of other home insurance options! You can use the iSelect comparison tool to do this in a few clicks and taps. 

Do I pay an excess every time I claim?

This one can sting, but if you make multiple separate home insurance claims (e.g., a theft and then storm damage), unfortunately your excess applies to each incident. This is different to say health insurance, where you may only have to pay one excess per year even if you are admitted to hospital multiple times.  When it comes to home insurance, yep in almost all cases, an excess applies for each insurance claim you make.   

You can’t really ‘bundle’ claims to avoid multiple excess payments – even if they happen close together.  

However, for some insurers, if you need to make a claim for loss or damage to both your home and contents, then you won’t have to pay two excesses. You’ll only need to think of the higher of the two basic excesses. 

It’s good motivation to weigh up whether smaller repairs could be handled out of pocket and save those claims (and excess payments) for more significant incidents.  

Make an excess work for you

Picking the right home insurance excess is all about balance. Think of it as your up-front investment in peace of mind. Whether you prioritise saving on premiums or prefer lower out-of-pocket costs during a claim, what matters is making a choice that works for your financial situation and the reality of your risks.

Want to make it easier? At iSelect, we can help you explore policies, premiums, and excesses so you don’t drown in an ‘excess’ of options.