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Car Insurance Excess Explained

Tue, 17/10/2017
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What is car insurance excess?

Car insurance excess is a fixed amount of money you will need to pay if you have to make a claim. This is made up of a compulsory (or ‘mandatory’) excess amount set by your insurer, and a voluntary excess you choose yourself. The compulsory amount determines the minimum amount you would have to pay if you made a claim.

For example, imagine you are making a claim for £1,000. Your compulsory excess might be £200, and you might choose to pay a voluntary excess of £100 on top of this. This would mean that you would pay a total of £300 towards your claim, and your insurer would pay the remaining £700. Remember, you will only need to pay your excess if you make a claim.


What is car insurance excess for?

Car insurance excess is set by insurers to make sure motorists don’t claim for minor bumps and scrapes. These smaller claims would increase administration costs for the insurance companies, and in turn this would increase insurance premiums for all motorists.


What is the difference between compulsory and voluntary excess?

As the names suggest, compulsory excess is an amount set by your insurer, which cannot be changed. Voluntary excess is an amount on top of that which you can set when you buy your car insurance. This is not negotiable once you have taken out your insurance. For example, you can’t set your voluntary excess as one amount when you buy your insurance, and then change the amount or choose to not pay when it comes to making a claim.


How much does car insurance excess cost?

Your compulsory excess is based on the details you provide when taking out your insurance policy. You age, experience, and vehicle could all affect the compulsory excess set by your insurer.

The cost of your excess will also vary between insurers, and parts of your policy may have a different excess. For example, windscreen repairs and replacements may come with a lower excess as these cost less than other car repairs. Check your policy carefully.


How much voluntary excess should I pay?

Voluntary excess amounts could be anything between £50 and £1,000, depending on which insurer you go with. When you are choosing how much voluntary excess you would like to pay, it’s important to be realistic. If you had an accident, how much excess could you afford? If you make a claim but find you can’t afford to pay your excess, your insurer might not pay out for your claim.

If you consider yourself a careful driver, or if you drive infrequently, you might be more inclined to opt for a higher voluntary excess because you may feel it is unlikely you will need to make a claim. Setting a higher excess can reduce your insurance premiums, so this may be worth considering. On the other hand, if you drive long distances or on roads where you feel you are more likely to have an accident, you might choose a lower voluntary excess.


What happens with my excess if I make a claim?

If you make a claim and the accident was someone else’s fault, your insurer might waive your excess and pay your claim in full. However, every insurer is different, so check the terms of your policy to confirm this. It is likely that you will have to pay the excess while the accident is being investigated, and then claim the excess back later.

If you make a claim, you will need to pay both the compulsory and voluntary excess.

It is worth bearing in mind that your excess will be the same no matter the size of your accident or the cost of your repairs. So if you have a minor accident, your excess might be more than the total cost of your repairs. In this instance you will need to decide whether or not it is worth claiming on your insurance. Either way, you should let your insurer know when you have had an accident, even if you don’t make a claim. If you do go to your insurer, they might not pay out for claims lower than your excess.


How does excess affect my premiums?

Your compulsory excess might be higher if you are a young or inexperienced driver, or if you drive a high-performance car, because this puts you in a higher risk category.

However, your voluntary excess can affect your premiums in a positive way. Increasing the amount of voluntary excess you are willing to pay can reduce the cost of your insurance. This is partly because if you have a high excess, you are less likely to make a claim. When you are buying your insurance, experiment with voluntary excess to see how setting it higher or lower affects your premiums.

Some providers offer car insurance excess protection, which allows you to claim back your excess if you make a claim. However, this will increase the cost of your premium and if you don’t make a claim, you won’t need it.

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