Find the optimal excess level for any insurance policy. Compare the premium saving from a higher excess against the additional cost per claim to see exactly how many claim-free years you need to break even.
| Excess Level | Annual Premium | 10yr Premiums | Est. Claim Costs | 10yr Total |
|---|
The optimal excess level balances two competing costs: lower premiums (from a higher excess) against higher out-of-pocket costs per claim. The break-even calculation is simple: how many claim-free years does the annual premium saving take to offset the additional excess per claim? If you expect to claim less frequently than the break-even period, a higher excess is worthwhile. The key constraint: never choose an excess you cannot afford to pay.
| Excess Level | Typical Premium Reduction vs £0 Excess | Best For |
|---|---|---|
| £0 (no excess) | Baseline | People with no savings buffer |
| £250 | ~10–15% | Most households as a starting point |
| £500 | ~18–25% | Good balance for most |
| £1,000 | ~25–35% | Savers who rarely claim |
| £2,000+ | ~35–50% | High-net-worth with strong savings |
Choose the highest excess you can comfortably afford to pay if a claim occurred. The general principle: the excess should not cause financial hardship if you had to pay it. For most households, £250-500 is a good balance. For car insurance, the excess is usually split between compulsory (set by insurer) and voluntary (your choice) — only increase the voluntary component. Never set an excess so high that you are tempted not to claim on legitimate losses.