Car Insurance Excess

Car insurance excess: How does it work?

By Nathan Barnett, Editor at Last updated 30th April 2024.

Nathan Barnett

Understanding car insurance excess is crucial for car owners and drivers. We'll help you understand the various forms of excess and how they affect your policy.

What is car insurance excess?

The "excess" in car insurance is the money you agree to pay out of your own pocket towards any claims you make on your policy.

Let's say your car insurance policy has a £250 excess. Imagine you've had an accident that's caused £1,000 worth of damage to your car. You make a claim on your insurance to cover the costs. You'll have to pay the first £250, and your insurer will take care of the remaining £750.

It's usually not practical to claim for any repairs that cost less than your excess amount. Most insurers won't even cover you for damages less than excess. For instance, if your excess is £250 and your wing mirror gets scratched, costing £70 to repair, it's better to pay for the repair yourself rather than filing a claim for £70 with your insurance provider.

What is compulsory excess?

Most car insurance policies come with two types of excess - compulsory and voluntary.

Compulsory excess is the excess determined by the insurer when you first take out your policy. It’s the amount you must pay when you make a claim on your car insurance.

The amount your compulsory excess is set to can vary depending on your age, driving experience and the car you drive.

What is voluntary excess?

When you take out your car insurance policy, you can choose an additional amount of excess to pay if you make a car insurance claim. This is called voluntary excess.

You may be thinking, why would I choose to pay more?

By raising your voluntary excess, you could bring your insurance premium down.

It's possible that you may never need to make a claim on your car insurance -  many drivers go for years without having an accident. However, you'll always have to pay for your car insurance, and choosing to pay more in voluntary excess is one way to lower the cost of your insurance, as long as you don't end up having an accident.

It’s important to remember that if you did need to make a claim on your insurance, you will have to pay the voluntary excess you agreed on when you took the policy out. It’s therefore important to make sure you set your voluntary excess to an amount you could afford.

Can I reduce the voluntary excess on my car insurance?

It may not be possible to decrease your voluntary excess once you’ve purchased your policy, but if your circumstances change, your insurer may be able to help.

To find out whether you can reduce your voluntary excess, the best thing to do is call your insurance provider and explain the situation to them.

When do you pay excess on car insurance?

You’ll need to pay both your compulsory and voluntary excess whenever you claim on your car insurance.

This is regardless of fault, but in most cases, if it is decided the accident or reason to claim was not your fault, the insurance company will claim back your excess and return it to you.

Excess protection

Excess protection is an additional form of cover; it’s sometimes included as standard on some policies or can be added for a small fee to others.

With excess protection, you don’t have to pay your excess when there is no third party for the excess to be recovered from. For example, most excess protection insurance will cover you:

  • If your car is vandalised or stolen
  • If the third party has fled the scene of a crash or damaged your car and driven off
  • If the third party was an uninsured driver
  • If you were at fault

What if I can’t afford to pay my excess?

If you’re involved in an accident, but can’t afford to pay your excess, speak to your insurance provider ASAP. They may be able to put you on a payment plan. Unfortunately, if they don’t offer you a payment plan, your provider may not be able to process your claim if you’re unable to pay your excess.

This is why it’s important to compare insurance policies and find the one with the right level of cover for you, at the price point affordable for you.

The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.