For UK homeowners looking to cut their expenditure, raising the excess on their home insurance policy is an increasingly popular option. By doing so, households can save hundreds of pounds per year in premiums. However, it's essential to weigh up the benefits against potential drawbacks. When you raise your excess, you're essentially paying more out-of-pocket in the event of a claim. This might not be a concern for those with a substantial emergency fund or a high level of financial resilience. Yet, for others, particularly those on a tight budget, it could prove catastrophic.
According to data from the Association of British Insurers (ABI), increasing your home insurance excess by £250 can save around £150-£200 annually. This may seem like a significant cost-saving, but what happens when disaster strikes and you need to make a claim? A recent survey conducted by our sister publication found that nearly 30% of homeowners who increased their excess struggled to meet the additional costs involved.
Before making any decisions, it's crucial to crunch the numbers and consider your individual circumstances. For those with a solid emergency fund in place, raising the excess might be a viable option. However, for others, particularly first-time buyers or those on a tight budget, it could prove detrimental to their financial stability.
As we navigate the complexities of home insurance, one thing is clear: homeowners must prioritise their financial well-being above all else. We recommend that households take a closer look at their individual circumstances and calculate the costs involved in raising their excess before making any decisions.