Being insured doesn’t necessarily mean the whole bill is covered.
How much you’re expected to pay when making a claim depends on the excesses in your car insurance policy. In this guide we’ll explain the different types of excess, when they apply and exactly what to check when comparing cover – so you don’t end up with any nasty surprises.
What is car insurance excess?
In a nutshell, car insurance excess is the maximum amount you are expected to pay towards a claim before your insurer covers the remaining cost.
It might be useful to look at an example. Let’s say your total excess is £300, and you make a claim for £2,000 following an accident – that means you would usually contribute £300 and your insurer would cover the remaining £1,700, subject to the policy terms.
What are the different types of car insurance excess?
You might come across a number of different types of excess while looking for your car insurance. But don’t worry too much – they’re not as complicated as they initially seem.
The main types of excess are:
Compulsory excess
This amount is set by the insurer. The exact figure is dictated by your policy and can depend on factors like age, driving experience and even the car you drive.
It’s essentially a reflection of the insurer’s risk assessment, and indicates how much you will be expected to contribute towards any claims. This payment is, as the name suggests, compulsory.
Voluntary excess
This is an additional amount that you choose to pay, on top of the compulsory excess. You might question why anyone would choose to pay more than necessary, but a higher voluntary excess can often reduce the price of your premium, simply because you’re agreeing to cover more of the cost yourself if you claim.
In essence, agreeing to pay more when you claim could save you money in the long run – especially if you never end up needing to make a claim.
Total excess
As you might expect, this is the total you would need to pay on making a claim – typically calculated as your compulsory excess plus your voluntary excess.
An example might be useful here. If your policy had:
- £250 compulsory excess
- £150 voluntary excess
Then your total excess would be £400. If you made a claim for, say, £2,000, that’s the cost you would be expected to pay yourself, and your insurer would cover the remaining £1,600.
Can different excesses apply to the same policy?
Yes. The excess you pay can depend on who was driving and what you’re claiming for. While your policy will most likely have compulsory and voluntary excesses to cover general claims, some policies also have separate excesses for windscreen or glass claims, theft and certain types of vehicle damage.
Young or inexperienced drivers may also face an additional excess.
It’s a good idea to check your policy documents, including your policy schedule, for the relevant amounts and when they would apply.
When do you have to pay an excess?
Usually, you’ll have to pay an excess when you make a claim on your own insurance, be it for accident damage, theft, vandalism or anything else. Depending on your insurer, you may have to pay it directly towards the repair bill, or have it deducted from any settlement you receive.
An important note: you may still need to pay your excess – at least to begin with – even if the accident wasn’t your fault. However, if your insurer successfully recovers its costs from the other driver (or their insurer), you may then be able to recover your excess too.
Is a lower car insurance excess always better?
The short answer? It’s all about balance.
A lower excess could certainly make any unexpected claims a bit more affordable, but may also come with a higher premium. Whether that premium is worth paying depends entirely on your budget and circumstances.
Think about both the regular cost of your insurance and the amount you’d need to find at short notice if you had to make a claim. A sensible excess is one you can realistically afford without making the premium too expensive.
Can a higher voluntary excess make your car insurance cheaper?
By choosing a higher voluntary excess, you’re agreeing to contribute more towards the cost of a future claim, which essentially means the insurer is taking on less financial risk and may therefore offer you a lower premium in return.
Sounds great on paper, but – as we’ve already seen – lower premiums don’t necessarily mean better value. Say you increased your voluntary excess by £250, which saves you £20 on your annual premium payments – if you ended up needing to make a claim, and paying that extra £250, that reduction in your premiums wouldn’t feel like much of a saving.
It’s always worth looking at the numbers carefully when comparing quotes, rather than simply choosing the one with the highest excess and lowest premiums.
So how much voluntary excess should you choose?
If you’re thinking about increasing your voluntary excess, there are a few important things to consider:
- How much you could comfortably afford at short notice
- The compulsory excess already included in the policy
- How much increasing the excess actually reduces your premium
- The value of your car
- Whether any additional excesses apply
Keep in mind that your voluntary excess is added to your compulsory excess. If your voluntary was £300 and your compulsory was £500, you’d be expected to pay £700 towards a claim.
What happens if a repair costs less than your excess?
If the cost of repairing your car is lower than your total excess, your insurer generally won’t pay anything towards the repair.
Remember that your excess represents the maximum amount you’re expected to contribute towards an eligible claim, before your insurer starts covering the remaining cost. So, if the repair costs came in below that maximum, you’d be expected to pay the whole thing.
It might be helpful to look at another example. Let’s say your total excess (that’s voluntary and compulsory) is £500, but the damage to your car will cost just £350 to fix. If you made a claim, you’d pay the £350 repair cost, and your insurer would contribute nothing.
This is really important to bear in mind. Even if your repair costs are only slightly higher than your excess, it might not be worth making a claim and losing out on your no-claims bonus. Of course, you should still follow your policy’s requirements for reporting accidents or damage, even if you decide not to make a claim.
What should you check when comparing car insurance?
So with all that in mind, what should you be looking out for when comparing car insurance quotes? The main thing to remember is that the premium is only part of the picture.
Before choosing a policy, be sure to check:
- Compulsory excess: The amount set by the insurer.
- Voluntary excess: The extra amount you agree to contribute towards a claim.
- Total excess: The compulsory and voluntary amounts combined. This is the amount that you would be required to contribute towards a claim.
- Additional excesses: Any extra amounts that apply to particular drivers or claims.
- Level of cover: What protection is included and whether it meets your needs.
- Policy exclusions: The situations and losses the insurance won’t cover.
- Overall annual cost: The full amount you’ll pay for cover, including any interest or fees for paying monthly.
Ready to compare? Use our handy comparison tool to explore your options – and be sure to check the policy details before you buy.
