Three numbers decide most of what you pay and what you get from a policy: the premium, the excess and the limit. Getting them right is a bigger lever than hunting for a marginally cheaper quote.
The premium
The premium is the price of the cover. It reflects the insurer’s view of your risk and the cost of claims across the market. Our explainer on how insurers calculate risk covers the drivers behind it.
The excess
The excess is what you pay toward a claim before the insurer pays the rest. A higher excess usually lowers the premium but raises what you must find at claim time. Voluntary and compulsory excesses can combine, so check the total you would be asked for after a loss.
The limit
The limit is the most the insurer will pay, either per claim or across the policy. Set it to cover a realistic worst case, not just the everyday. For buildings insurance that usually means the rebuild cost, not the market value. For contents, it means the cost of replacing everything new for old.
How they interact
- A low excess feels safe but raises the premium.
- A high limit costs more but prevents a shortfall after a big loss.
- A very high excess can mean small claims are not worth making at all.
The companion pieces on how to read a policy and underinsurance and the average clause show why limits deserve attention. If a premium looks odd, the regulator’s pricing rules are there to keep the bargain fair.