Car Insurance Excess: How Does It Work?

What is car insurance excess?

Car insurance excess is an agreed amount that you will pay towards any individual claim you make on your car insurance.

Let’s assume your insurance policy holds a £70 excess, and you’re unfortunate enough to have an accident. The price of your repair is £1,070, so the insurer will shoulder £1,000, which leaves you with £70 excess to pay the bill in full.

Now, let’s say you’ve only grieved for a broken door mirror. All it requires is a new lens, which costs £20, £50 cheaper than your excess, you can’t claim for it, as the cost of repair is lower than the excess amount.

Most policies come with two types of excess – compulsory and voluntary.

What is compulsory excess?

Compulsory excess is the amount you must pay when you claim on your car insurance; this figure is set by your insurance company and is non-negotiable. The amount can change based on various factors, including your driving skill, age and the type of car you drive.

A new driver may need to pay a greater compulsory excess than a more experienced driver as they are seen as a higher risk.

What is voluntary excess?

On top of your compulsory excess, voluntary excess is an amount you choose to pay towards insurance claims. By raising your voluntary excess, you may be able to bring your insurance premiums down. However, remember that you will have to pay this out if you make a claim, and you can decide not to pay any voluntary excess and only compulsory excess if that suits you more; it all depends on how much you can afford to expend if you need to make a claim.

When do you pay excess on car insurance?

You will need to pay your compulsory and voluntary excess (the predetermined amount you chose when taking out your insurance) whenever you claim on your car insurance. This is regardless of fault; however, in many cases, if it is decided that you were not at fault, the insurance company will claim back your excess.