A higher home insurance excess can reduce the premium, but it also moves more of an eligible claim’s cost onto your household. Before accepting the cheaper quote, compare otherwise equivalent cover and check whether you could actually fund the excess after an incident. A lower annual bill is not automatically a better fit for your cash position.
This is general information for Australian readers, not personal financial advice. Cover depends on your policy terms, limits, exclusions, certificate and Product Disclosure Statement (PDS). The insurer examples below describe that provider’s offering, not a rule that every Australian insurer uses.
Understand what you are trading
AAMI’s Flexi-Premiums explanation distinguishes the premium, paid whether or not you claim, from the excess paid towards a covered claim for an incident. It says choosing a higher excess on eligible products reduces the premium, while choosing a lower excess increases it. Its listed eligible products include Home Building and Home Contents.
This explains the trade-off, not your personal saving or the excess treatment for every possible event. Get actual quotes and read the relevant documents. Raising an excess does not remove exclusions, increase the sum insured or turn maintenance costs into insured damage.
Compare like-for-like quotes first
Save a quote using the current excess and another using the proposed excess. Keep the same building and contents sums insured, address, occupancy information, options, start date and payment frequency. If you change several inputs together, you cannot tell which change produced the cheaper total.
Compare the full payable amount over the same period, including any relevant instalment costs. Do not compare one monthly payment against a yearly premium or treat an introductory offer as a permanent saving. Ask how long any discount applies and retain the quote references.
Then check the certificate and PDS for excesses beyond the selected basic amount. Ask whether a particular event attracts an additional or different excess and how excesses apply if both building and contents are damaged. Do not assume that two insured sections always mean two excesses, or that a single event always means only one.
Make a simple decision worksheet
Use these headings without guessing figures:
- Current excess and annual payable premium.
- Proposed excess and annual payable premium.
- Annual premium reduction for otherwise equivalent cover.
- Additional household contribution if the higher excess applies.
- Cash available immediately without compromising essential expenses.
- Unresolved incident-specific excess conditions.
Calculate the premium reduction by subtracting the proposed premium from the current premium. Separately subtract the current excess from the proposed excess. These two differences describe the offer; neither predicts whether or when you will claim.
If you calculate how many claim-free years of unchanged savings would equal the extra excess, label it a simplified comparison. It assumes constant prices and ignores future incidents and changes in cover. It is not a prediction, an investment return or proof that the higher excess is worthwhile.
Test emergency access, not just the savings balance
Imagine discovering insured damage tomorrow. Would the reserved money still be accessible if you also needed transport, urgent household supplies or somewhere safe to stay? Do not assume that every emergency expense will be immediately reimbursed by the insurer.
Ask how the excess would be collected for an approved repair or deducted from a settlement, and when it would be required. Keep this question separate from whether the claim is covered. Being able to pay an excess does not establish claim acceptance, and lodging a claim does not establish approval of repairs.
For an associated cash-flow issue, read what to check before temporary accommodation cover runs out. Accommodation benefits have separate conditions and limits; they should not be treated as an unlimited emergency fund.
Confirm the amendment actually took effect
If you choose a new excess, obtain the revised certificate, payable premium and effective date. A quote, submitted request or automated acknowledgement is not proof that the change has been processed. Check that the selected excess and other cover details are correctly recorded before relying on the amendment.
Do not describe a later change as rewriting the terms for damage that has already happened. If an incident occurred before the amendment, give the insurer the correct incident date and ask which existing terms apply.
Quick questions before increasing the excess
Should I choose the highest available amount? Not merely because it produces the cheapest quote. Test affordability alongside the actual saving and conditions.
Does a higher excess change what events are insured? It should not be assumed to expand cover. Check the covered events, exclusions and selected options independently.
What records matter? Save both matched quotes, the applicable PDS, your cash worksheet and the revised certificate. Recheck the decision at renewal rather than assuming the same saving continues.
Sources
AAMI: Flexi-Premiums explains its premium/excess trade-off and eligible products. AAMI: Home Insurance describes its building and contents options and warns that limits, conditions and exclusions apply.
