How does car insurance excess work?

One thing to consider when you choose car insurance is the ‘excess’. 

There is often a lot of jargon to decipher, so you may not be clear what the excess on insurance actually is. This is a quick overview to help answer any questions you might have.

In a nutshell, it is a sum of money you would pay in the event of an insurance claim, with your insurer paying the rest.

The size of the excess depends on your car insurance policy, so it’s something to consider when you are choosing the right policy for you. If you already have insurance in place and are wondering how much your excess is, then check your policy documents, or if you still aren’t sure, speak to your insurance provider.

If you do need to make a claim, the payment of the excess works in different ways, depending on your insurer. Often, you’ll pay the excess immediately upon making a claim, although some insurers may deduct the cost from the total that’s owed to you at the end of the claim.

Compulsory and voluntary excess

The excess usually comes in two parts: compulsory and voluntary excess.

Compulsory excess is the amount that you have to pay when you make a claim on your insurance. It is set by the insurer based on factors including the model and age of your car, as well as its condition.

Voluntary excess, as the name suggests, is an additional, non-compulsory amount that you can choose to add to your insurance. Choosing to add this can lower your premiums, but on the flipside, if you need to make a claim, you will need to pay more overall if you have added a voluntary excess.

So, if you consider yourself a safe driver, you may choose to pay a higher voluntary excess. But you need to be sure that you could afford to pay the higher total excess were you to make a claim.

Circumstances when you don’t have to pay the excess

You don’t always have to pay the excess when making an insurance claim. For example, when the incident is found to be someone else’s fault. In that case, one of the following would apply:

• You wouldn’t pay the excess at all, or
• You would have the excess refunded (depending on your insurer and policy type).

You also don’t have to pay the excess if someone else claims against you or you have third-party only insurance.

Alternatively, you may choose to take out excess protection insurance. This covers the cost of your excess if you need to make an insurance claim.

If you opt for excess protection insurance, then bear in mind that some providers limit how many times you can claim, while some will put an overall limit on the amount you can claim for.

Additional excess payments

In some situations, you may have to pay an additional excess. This all depends on your specific insurer and policy type.

For example, you may have to pay additional excess if:

• You are under 21 years old
• Your windscreen needs replacing
• A garage or mechanic that isn’t approved by your insurer repairs your car

As always, it’s really important to carefully read the small print of your insurance policy to make sure you have the cover that’s most appropriate for you, and you don’t come up against any unexpected charges.

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