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What is car insurance excess?
When you buy car insurance, you’ll be asked to agree an excess, but what you choose also affects what you pay for your policy overall; here’s how it works and the impact it has on your premium.
What does car insurance excess mean?
Your car insurance excess is an amount of money you put towards a claim. Almost all insurance policies (not just your car cover) have an excess which is usually split into two parts:
Compulsory excess
Compulsory excess is an amount set by the insurer and is typically based on your circumstances. For example, if the insurer thinks there’s a greater risk of you making a claim, the excess is likely to be higher compared to a lower risk driver.
Voluntary excess
This is voluntary in the sense that it’s an amount you decide and agree with your insurer. You still need to pay it alongside the compulsory excess in order to make a claim.
How does car insurance excess work?
If you make a claim on your car insurance, you’ll need to pay both parts of the excess (compulsory and voluntary). This is your contribution towards the cost of any repairs. Your insurer covers the remaining amount.
In most cases, your excess is taken as an upfront payment. On other occasions, it may be taken off any compensation you receive, for instance, if your car is written off and you’re given a settlement sum.
Here’s an example of how excess is applied if your car’s been damaged and you need to claim for £1,500 worth of repairs:
- Compulsory excess: £200
- Voluntary excess: £100
- Total excess you need to pay if you make a claim: £300
- You’ll pay the £300 excess, and your insurer will pay £1,200
What happens if I don’t pay the excess?
If you want your claim to go ahead, you must pay the excess. If not, then your insurer won’t proceed with your claim. In some cases, insurers may deduct the excess from any compensation you receive.
Can I pay my excess in instalments?
In most cases, no, you won’t be able to pay the excess in instalments. That said, if you can’t afford the excess but need repairs carried out after an accident, let your insurer know and they should work with you to find a solution.
Can I change the excess?
You can change your excess when you renew your policy, you won’t be able to change it part-way through.
Do I pay excess even if I’m not at fault in an accident?
If you’ve been involved in an accident and it’s not clear who was at fault, you may need to pay your excess to have your car repaired. If it can be proven that someone else was at fault, your insurer will usually refund you the excess, so you won’t be out of pocket.
Do I pay the excess if an uninsured driver causes an accident?
If an accident is not your fault, you won’t normally have to pay the excess as the cost of repairs is covered by the other driver. Unfortunately, if you’re hit by an uninsured driver, you may have to pay your excess if your car needs repairs.
Some insurers may waive the excess in this instance, but this will be up to them.
How does car insurance excess affect my premium?
A high voluntary excess lowers your overall premium. This is because you’re agreeing to pay more towards your claim. However, while that’s a good idea in theory, remember that you must pay all of your excess if you want a claim to go ahead, so it should be an amount you can afford.
Is it better to have a high or low excess?
Setting a high voluntary excess could mean you end up pricing yourself out of making a claim because you can’t afford to proceed. Insurers will also reject claims that are less than the excess so the burden of repair costs will fall to you.
With this in mind, it’s better to choose a realistic voluntary excess that’s affordable and not so high that it means you can’t claim.
What is excess protection insurance?
This is a type of insurance policy that covers your excess. It’s usually offered as an optional extra when you buy insurance (it’s available for most policies and not just car cover).
If you buy excess protection with your car insurance, you’ll still be expected to pay the excess when you make a claim. You’ll then need to make a separate claim on your excess protection policy to have the excess amount refunded.
Excess protection costs vary but you can expect to pay around £20-£30 a year for a policy, but it will depend on how much your excess is.
Why do we have car insurance excess?
Excess is there to stop policyholders from making lots of small claims which would ultimately push up premiums for everyone.
Contributing towards a claim also means claimants are more likely to be genuine and helps reduce fraud.
Search for car insurance and choose your excess
When you compare car insurance, insurers will usually let you see how increasing or decreasing the excess affects your premium. Remember – a higher voluntary excess can help reduce the cost of an annual policy, but it should still be a figure you can afford.
If you’re keen to find other ways to lower your car insurance costs, you can find tips and advice in these informative guides: