Understanding insurance deductibles and excesses
By Everyday Guide Hub Editorial Team · Last updated October 28, 2026
The deductible (or excess) affects both your premium and what you pay when you claim. Here is how to think about it.
This guide is general information only and is not financial, insurance or legal advice. Please speak with a qualified professional about your own situation. Read our disclaimer.
What a deductible is
A deductible—called an excess in some countries—is the amount you pay toward a claim before your insurer pays the rest. For example, with a deductible of 500 and a covered loss of 2,000, you would typically pay 500 and the insurer would pay 1,500, subject to the policy terms.
How it affects your premium
Policies with a higher deductible often have a lower premium, because you agree to cover more of each claim yourself. A lower deductible usually means a higher premium. The right balance depends on your budget and how comfortable you are paying a larger amount at short notice.
Compulsory and voluntary amounts
Some policies combine a compulsory deductible set by the insurer with a voluntary amount you choose. Check the total you would pay per claim, not just one part.
You may also find helpful: How to create a home inventory for insurance
Questions to ask before choosing
- Could I afford the deductible tomorrow if something happened?
- Does it apply per claim, per incident, or per year?
- Are there different deductibles for different types of claims?
Read the policy documents
Deductibles, exclusions, and limits vary widely between policies and countries. Read the policy summary and terms, and ask the insurer or a licensed broker if anything is unclear.
This article is general information and not insurance advice.
Key takeaways
- The deductible is your share of a claim before the insurer pays.
- Higher deductibles usually mean lower premiums.
- Check the total deductible and how often it applies.
- Choose an amount you could realistically afford at short notice.
Frequently asked questions
Is an excess the same as a deductible?
In most contexts, yes—the terms are used in different countries for a similar idea.
Should I always pick the highest deductible?
Not necessarily. It lowers premiums but increases what you pay when you claim.
Written and reviewed by the Everyday Guide Hub Editorial Team. Read how we work in our editorial policy.
Continue reading
Insurance Explained
How to create a home inventory for insurance
A simple record of your belongings can make insurance claims faster and help you choose the right level of cover.
3 min read
Insurance Explained
Understanding deductibles, premiums and coverage limits
Learn how three common policy terms work together and what to check when comparing insurance options.
6 min read
Insurance Explained
Life insurance types explained in plain English
A clear overview of term, permanent and group life insurance, including how their general features differ.
6 min read