Car insurance excess explained

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What is car insurance excess?

Excess is the sum of money your insurer will charge you whenever you make a claim. It's an agreed amount that is, essentially, your payment to them to handle each claim.

An example scenario: driver A is bumped at a roundabout by driver B. Driver A's insurer has agreed a £75 excess payment. Once the claim is complete, repairs to driver A's car come to £300. They would be paid out £225 by the insurer to cover the repairs, less the excess payment. The insurer would then attempt to reclaim the costs from driver B's insurance, and if driver B has admitted fault it's likely that they would be successful, allowing them to later reimburse the £75 excess.

You can often claim the excess back if it can be proven that the accident wasn't your fault, but this is at the discretion of your insurer, and it will rarely be returned until the claim is complete and the details settled.

In some cases, if it's immediately clear that the accident is someone else's fault, your insurer may waive the excess fee. Insurers are unlikely to make pay outs on any claims that are deemed to be worth less than the excess payment, so for small damage it's advisable to pay for the repairs yourself and protect your no claims bonus. This is the purpose of excess for insurers - it prevents them having to deal with small claims that would increase their workload and force the prices of insurance up across the board.

Your excess is made up of two parts, compulsory excess and voluntary excess. Added together they make the overall excess.

What is compulsory excess?

Compulsory excess is the standard amount to be paid by you on the opening of a claim. This amount is decided by the insurer and takes into account the circumstances you offered to them when receiving a quote.

The compulsory excess is generally higher for drivers in categories that are considered to be high risk, including young and inexperienced drivers, and those with previous convictions. This will apply to the car as well, so luxury or high-performance cars will generally command a higher compulsory excess. This makes sense overall, as higher risk drivers are more likely to claim, and higher risk vehicles are likely to have higher value claims.

What is voluntary excess?

Voluntary excess is a value set by you. It's to be paid additionally to your compulsory excess whenever you make a claim. Most car insurance comparison sites will allow you to see how changing this value will affect the cost of the premiums on the insurance. Raising the voluntary excess will decrease the premium and vice versa.

In principle, having a higher voluntary excess could help you save money. If you don't make any claims on your insurance, you'll have paid lower premiums for the full duration. However if you do make a claim you will need to pay this as well as the compulsory excess, which could sting if you’re not careful. It's therefore advisable to choose a realistic amount that you would be able to afford to pay back in the event of a claim.

Voluntary excess can be a good idea if you consider yourself a safe driver. However, it's worth remembering that anyone can need an insurance claim, and if you're hit by an uninsured driver you're likely to have to pay your excess in full, as the insurer won't be able to reclaim the cost.

What will I have to pay?

In a nutshell, inexperienced drivers will generally pay a higher car insurance excess as their compulsory excess will be higher.

Anyone can reduce their premiums by raising their voluntary excess, but this should be agreed in line with what you can afford to pay.

Excess may be different for less valuable claims, for example many insurers will have a lower excess cost for windscreen repairs, as they are common and often inexpensive. And it's worth keeping in mind that, while it's beneficial to know about car insurance excess and how it affects your claims, the best possible outcome is to make no claims for the duration of your contract. No claims = no excess payments!