Home Insurance Premium vs Excess: A Comparison Worksheet

Short answer

A lower annual premium can leave more money in the regular budget while a higher excess increases the amount payable for a claim. Compare both amounts. The premium saving alone does not show whether a policy suits your circumstances.

This worksheet isolates the arithmetic using invented quotes. It does not rate insurers, estimate the likelihood of a claim or recommend changing cover. Start with the annual home bills budget guide if you first need to convert a renewal amount into a monthly allowance.

Record the cover before comparing the price

ASIC's Moneysmart home insurance guidance explains premiums and excesses and directs readers to compare coverage, exclusions and limits. It points to the Key Fact Sheet and product disclosure statement (PDS) for policy information.

Use this original record for two actual quotes. Leave an unanswered question visible rather than assuming the policies match.

If cover differs, the price difference is not solely the price of changing the excess. The worksheet cannot put a value on the missing or additional protection.

Worked example: two invented quotes

Assume, solely for this arithmetic example, that the cover and all other charges match and that each hypothetical accepted claim has the single listed excess. The quotes are not market prices.

Quote B's premium is $300 a year lower, or $25 a month. Its excess is $1,000 higher for each claim in this simplified example.

For a one-year comparison, add the annual premium to the assumed number of claims multiplied by that quote's excess:

These totals are not the household's total cost of damage. They exclude uninsured losses, amounts above limits, additional excesses and any other payments. Actual claims can involve different terms, and a claimed event is not necessarily covered.

Why the savings-to-excess ratio has limits

Dividing the extra $1,000 excess by the $300 annual premium saving gives 3.33 years. That means 3.33 years of unchanged premium savings would equal one extra excess in this example. At three full years the savings would be $900; at four they would be $1,200.

This ratio is not a probability or a recommended holding period. A claim could happen before the first year's saving has accumulated. Premiums, excesses and terms can change at renewal, and multiple claims change the arithmetic. If the premium saving is zero or negative, this particular savings ratio has no useful positive payback interpretation.

Keep the cash question separate

An invented household has $1,500 available for a possible excess. Against the example $2,000 excess, its cash shortfall would be $500. The lower $175 monthly premium allowance does not fill that gap immediately.

That is only a comparison of two entered amounts, not an assessment of how much emergency money a household needs. The mortgage buffer worksheet covers repayment reserves. Do not count the same cash as fully available for several different expenses at once.

The Mortgage Repayment Calculator can estimate the loan payment alongside these ownership expenses. It does not include an insurance policy assessment. For an initial purchase budget, use the Property Purchase Cost Calculator and record ongoing insurance separately.

Common questions

Does raising the excess always reduce the premium?

Use actual quotes to find the difference. Moneysmart describes a possible premium reduction, not a guaranteed saving of a particular size. Check the terms rather than extrapolating from this example.

Does the cheapest scenario identify the right policy?

No. The table answers a narrow arithmetic question under invented assumptions. Cover, exclusions, cash available and individual circumstances remain outside it. Ask the insurer to explain unclear terms and speak with a licensed professional where advice is needed.

Sources and limitations

Moneysmart: Choosing home insurance, updated 2 October 2026, was checked on 13 October 2026. The worksheet, quotes and calculations are our own hypothetical examples. No insurance products, live prices or claim probabilities were compared.

General information and indicative budgeting only, not personal financial, insurance, legal, tax or credit advice, a product recommendation, quote or assurance that a claim will be paid. Confirm policy wording and actual amounts with the provider.

Last updated: 13 October 2026.