What you need to know before you set your excess
What an excess is
An excess is the amount you agree to pay towards eligible treatment before the insurer pays the rest. It is chosen when you take the policy out and it appears on your certificate of insurance. If the eligible bill is smaller than the excess, you pay all of it and the insurer pays nothing; if it is larger, you pay the excess and the insurer pays the balance, subject to the policy limits.
It exists for two reasons. It removes the administrative cost of processing very small claims, and it gives the policyholder a stake in the cost of treatment. Both effects are reflected in the premium, which is why a higher excess buys a lower price. What it does not do is change what is covered: an excess applies only to treatment the policy would otherwise pay for. On an excluded condition you pay the whole bill, excess or no excess.
Per year or per claim
This is the single most important thing to check, and it is not standard across the market. Most UK policies apply the excess once per policy year, however many separate courses of treatment you have. Others apply it per condition or per claim, so a year with two unrelated problems costs you two excesses. A £500 excess applied per claim is a very different product from a £500 excess applied per year, even though the quote may show the same number.
| Situation in one policy year | Per-policy-year excess | Per-claim or per-condition excess |
|---|---|---|
| One course of treatment | Paid once | Paid once |
| Two unrelated conditions treated | Paid once | Paid twice |
| Treatment that spans the renewal date | May be payable again in the new year | May be payable again in the new year |
| A claim smaller than the excess | You pay the whole bill | You pay the whole bill |
The row about renewal catches people out most often. Where treatment runs across two policy years, many wordings treat the second year as a new year for excess purposes. If a course of treatment is likely to straddle your renewal date, ask the insurer in writing how the excess will be applied before the treatment begins.
Excess versus co-payment
An excess is a fixed amount. A co-payment is a percentage of the eligible bill, sometimes with a cap. On a small bill a co-payment can look cheaper; on a large one it can be far more expensive, because your share grows with the cost of treatment. Some policies use both. When comparing quotes, work out what each structure would cost you on a realistic bill rather than on the headline figure.
Choosing a higher excess
What works well
- A lower premium every month, whether or not you claim
- Fewer small claims, which on some policies helps protect a no-claims discount
- Simple to plan for, because the amount is fixed and known in advance
What to watch
- You must be able to find the money at short notice, when you are already unwell
- A per-claim basis can multiply the cost in a bad year
- Small outpatient claims may become not worth making at all
How the excess changes what you pay
There is no published, market-wide figure for how much a given excess reduces a premium, so this guide does not quote one. The saving varies by insurer, age, hospital list and the modules selected. The reliable way to find your own number is to ask for the same quote at two or three excess levels and compare the annual premiums directly — a comparison that takes minutes and answers the question for your circumstances rather than for an average.
A year with one course of treatment
Assumptions: a £500 excess applied once per policy year; an eligible bill of £3,200 for a consultation, a scan and day-case surgery; treatment authorised in advance and carried out at a hospital on the policy list; no co-payment and no annual limit reached. Figures are illustrative arithmetic, not a quotation.
- Eligible treatment cost
- £3,200
- Excess you pay
- £500
- Insurer pays
- £2,700
- Second unrelated claim in the same year, per-year basis
- No further excess
- Second unrelated claim in the same year, per-claim basis
- A further £500
The arithmetic is straightforward; the variable that changes the answer is the basis, not the amount. On a per-year basis this reader pays £500 in total for the year. On a per-claim basis the same two episodes cost £1,000. That is why the basis is worth more attention than the headline excess figure when comparing policies.
Market context is worth holding alongside the arithmetic. Insurers paid a record £4 billion of individual and workplace claims in 2024, up from £3.57 billion the year before, with 6.5 million people covered. [1] Rising claims costs feed through into renewal premiums across the market, and raising an excess is one of the few levers a policyholder controls when a renewal comes in higher than expected.
- 20233.57 bn
- 20244 bn
Adviser insight
“When a renewal comes in higher, the excess is the last thing I touch, not the first. I look at the hospital list and the outpatient limit first, because changing those changes what can actually be claimed. If the cover is right and the price still needs work, I ask for the same policy quoted at two excess levels and put the numbers side by side. If a year of premium saving does not cover the extra you would pay at the first claim, the higher excess is not a saving.”
How it is collected
Step 1: Treatment is authorised
The insurer confirms the treatment is eligible before it happens. This is pre-authorisation.
Step 2: The hospital invoices the insurer
Most bills are settled directly between hospital and insurer.
Step 3: You are billed for the excess
Either the hospital or the insurer collects it from you afterwards.
Step 4: Anything uncovered is billed to you too
Amounts above a limit, or fees above the insurer’s fee schedule, sit outside the excess.
The last step is the one to watch. A shortfall — the gap between what a consultant charges and what the insurer will pay — is not part of your excess and is not capped by it. Ask whether the consultant is fee-assured by your insurer before treatment. Information about private consultants and hospitals is published by the Private Healthcare Information Network, and disclosure obligations on private providers followed the competition regulator’s market investigation. [2][3]
Where the rules come from
The excess is a contractual term, so the wording governs. Regulation shapes how it must be explained to you: firms must give appropriate product information in good time before you commit, including a short standardised summary, [4] and under the Consumer Duty they must support your understanding rather than merely disclose. [5] If your excess basis is not clear from the documents, ask for it in writing before you buy.
If you believe an excess has been applied incorrectly, complain to the insurer first, then to the Financial Ombudsman Service if you are unhappy with the final response. [6] You can check the firm is authorised on the Financial Services Register. [7] For the wider picture, read what private health insurance covers and how medical underwriting works.
What excess levels are actually offered
There is no published market-wide table of excess levels, because each insurer sets its own. The range is wide, though: one major insurer publishes options of £100, £200, £500, £1,000, £3,000 and £5,000 on its main personal policy, chosen either when you apply or at renewal. [9] Most people buying individual cover sit at the lower end of a range like that. The very high figures exist mainly for people who want the policy to catch a serious, expensive episode and are content to pay for everything smaller themselves. Ask your insurer or broker for the full list of levels available on the specific policy, not the levels advertised generally, because they differ from product to product.
Where the excess sits in the wider cost picture
An excess is one lever among several, and it is easy to over-weight it. The others are the hospital list, the outpatient limit, whether therapies and diagnostics sit inside or outside that limit, and the underwriting basis. Changing any of them moves the price, and two of them change what you can actually claim for. Treat the excess as the last adjustment you make rather than the first, once the cover itself is right.
It also helps to know what the market pays out overall: insurers covered 6.5 million people and paid a record £4 billion in claims in 2024, against an average excess that is small relative to a single episode of private treatment. [1] The practical test at renewal is simple. Ask for the same policy quoted at two excess levels, look at the difference in annual premium, and compare it with the extra you would pay out of pocket the first time you claim. If a year of savings does not cover the additional excess, the higher excess is a bet rather than a saving. Your insurer must give you the information you need to make that comparison in good time before you commit. [8]
Looking at cover with PremierPMI
PremierPMI is a specialist private medical insurance broker and the publisher of The Health Guide. If you want to talk through what this means for your own cover, you can start there.
Or, if you would rather start here, send an enquiry and PremierPMI will contact you.
Common questions
Do I pay the excess once a year or for every claim?
What is the difference between an excess and a co-payment?
Does a higher excess always make the policy cheaper?
When do I actually hand over the money?
Does the excess apply to outpatient treatment too?
Can I change my excess mid-policy?
Does paying an excess count as a claim?
Is the excess the only thing I might have to pay?
Sources and methodology
- [1] Association of British Insurers. “Insurers process record £4bn across individual and workplace health schemes (2024 data)”. View source(opens in a new tab)Primary source
- [2] Private Healthcare Information Network. “Information about private hospitals and consultants”. View source(opens in a new tab)Primary source
- [3] Competition and Markets Authority. “Private healthcare market investigation”. View source(opens in a new tab)Primary source
- [4] Financial Conduct Authority. “ICOBS 6: Product information (FCA Handbook)”. View source(opens in a new tab)Primary source
- [5] Financial Conduct Authority. “The Consumer Duty”. View source(opens in a new tab)Primary source
- [6] Financial Ombudsman Service. “Complaints about medical insurance”. View source(opens in a new tab)Primary source
- [7] Financial Conduct Authority. “The Financial Services Register”. View source(opens in a new tab)Primary source
- [8] Financial Conduct Authority. “ICOBS 4: Information about the firm, its services and remuneration (FCA Handbook)”. View source(opens in a new tab)Primary source
- [9] Aviva. “How health insurance excess works (Healthier Solutions excess options)”. View source(opens in a new tab)Primary source
We cite primary sources wherever possible. Read about our sourcing methodology.
Andrew Buscu
PMI Specialist & Copywriter, PremierPMI
- Whole-of-market private medical insurance adviser
- Claims and renewal specialist
Andrew is a member of the private medical insurance advisory team. He gathers detailed client requirements and liaises with insurers to arrange tailored quotes across the whole UK market, guiding clients from first quote through to claims and renewal. In one case he reduced a client renewal premium from £36,000 to £11,520 without reducing cover.
Read full profile
Ilana Eldad
Corporate PMI Specialist, PremierPMI
- ACCA-qualified
- Corporate and SME scheme specialist
Ilana oversees business health insurance schemes for the corporate and SME team, guiding employers from initial quotes through claims and renewal. ACCA-qualified, she applies that financial background to reducing premiums and advising on tax-deductibility, and runs the largest corporate portfolio at PremierPMI.
Read full profile
