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A complete guide to private medical insurance excess

The excess is often one of the most misunderstood parts of an insurance policy, but it can have a big impact on the premium you pay. When it comes to private medical insurance (PMI), how excess is applied depends on the insurer and your policy.  

16.12.25

By Alan Boswell Group

The cost of PMI

To help you keep the cost of PMI down for yourself or your employees, we explain how health insurance excess works and how it affects premiums. 

What is an excess in health insurance? 

‘Excess’ is the amount of money you pay towards a claim; your insurer then covers the rest up to your policy limit. Almost all insurance policies have an excess, which is designed to reduce the likelihood of small, frequent claims. Keeping the number of claims lower overall means premiums can be kept as low as possible for more people. 

How does health insurance excess work? 

If you need to make a claim, you’ll usually be asked to pay the excess directly to the health provider before treatment begins. For example, if treatment were to cost £1,000 and your excess was £250, you’d need to pay the £250 upfront. Your healthcare provider would then invoice your insurer for the remaining £750.  

Remember to speak to your insurer before starting treatment, as you’ll likely only be covered if you use specialists and hospitals on their approved list.  

You’ll also need to consider how different insurers apply the excess; there are two ways this can be done: 

Excess paid once per policy year 

This method means you’ll only pay your excess once within the policy year. If you make any subsequent claims in the same year, you will not be asked to pay the excess again. 

This method is used by most insurers and preferred by policyholders. It’s generally considered the more cost-effective option too, especially if you’re likely to make several claims within 12 months. 

Excess paid per claim 

This method is less common, but it means you’ll need to pay an excess every time you claim. For example, if your excess was £150 and you made four claims within the policy year, you’d pay a £600 excess in total.  

If you make frequent claims, this method can become expensive. 

What’s the relationship between excess and premiums? 

The excess you pay can have an impact on your overall premium: 

  • A high excess typically means a lower monthly premium 

  • A low excess typically means a higher monthly premium 

This is because a higher excess reduces the insurer’s contribution and their exposure to risk (paying claims). Having a higher excess also means you (the policyholder) are less likely to make lots of small claims, which in turn cuts down your insurer’s admin and costs. 

On the other hand, a lower excess can make it more tempting to make multiple smaller claims throughout the year – increasing your insurer’s admin and costs. 

How do I choose the right PMI excess for me? 

The right excess for you will depend on your circumstances: 

  • Option A – a high excess: if you’re generally healthy and would be happy to cover the cost of smaller medical expenses yourself (or use the NHS), a high excess can help keep your premiums low.  

  • Option B – a low or zero excess: if you opt for a zero excess, it means you won’t have to pay anything towards a claim (but your premiums will be higher). This option could be better for you if you’re likely to claim several times a year and don’t want to worry about paying any extra costs.  

  • Option C – weighing up costs: this takes a little more time but can help you get the best value policy. When you compare policies, check what the premium is for a low and a high excess amount (for example, £100 or £500). If the money you save in premiums is bigger than the difference between the excess amounts, then choosing a higher excess could make more sense (but only if you have the money to cover the excess amount).  

Find PMI tailored to your needs and budget

Good value PMI is often a balancing act between getting the cover you want at a cost that fits your budget, but that’s where we can help.  

As an independent insurance broker, we can find you a range of quotes to choose from. Our experts can also guide you through your options and explain what a good policy for you (or your employees) might look like. 

Speak to us:  01603 218000

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