Higher home excesses

Standard excesses in home insurance policies have increased over the past 12 months according to independent financial research company Defaqto's latest report into the market.

The report: Home Insurance 2009: New customers only states that the number of insurers applying a £100 excess at quotation has increased by 7 per cent in the last year, with a number of insurers applying a £200 excess.

Mike Powell, Principal Consultant for General Insurance at Defaqto, said: "I believe there are two reasons for this. The first is to limit the exposure of the insurer and reduce the number of small claims being made.

"The second, and the more likely reason for the increase in excess levels, is that consumers are now becoming more acceptable to a higher excess being applicable. Home insurance has previously always had low levels of standard policy excesses, but excesses have been gradually increasing. That being said, consumers still have, with many insurers, the ability to ‘buy back' the excess to a level that may be more acceptable."

The report also shows a new trend in higher compulsory excesses for escape of water claims, with some being as high as £250.

Powell added: "Insurers have included additional wording, which states that a separate policy excess is applicable for escape of water claims. Some also state that the excess is in addition to the voluntary or any compulsory excess that is applicable to the respective policy. Others simply state there is a £250 compulsory excess applicable for all escape of water claims.

"Insurers and intermediaries must be clear when advising the customer of the excess that is applicable for escape of water claims. Consumers who purchase home insurance and are not aware of the excess could be in for a nasty surprise when they have to make a claim, and the insurer or intermediary could be accused of not treating customers fairly."