What is excess in car insurance?

When it comes to car insurance, there are a few terms that often leave drivers scratching their head and 'insurance excess' is one of them. Whether you're buying a new policy, renewing your insurance or making a claim, understanding how excess work can make a big difference in what you pay and what you're covered for.

Learn what happens when you claim in our guide to car insurance excess.

EASY AS HACK 

Remember to check the total car insurance excess on your policy when making a claim as sometimes this can be higher than the repair costs.

what is insurance excess?

In car insurance, ‘excess’ means the amount you’re responsible for paying towards each claim before your insurer contributes.

Your new policy will specify the excess amount, and the renewal documents your insurance company sends each year will also include it.

types of car insurance excess

Typically, your insurer will list two types of car insurance excesses on your policy – compulsory excess and voluntary excess.

You’ll pay both types of insurance excess after a fire, vandalism or a fault claim, which has damaged the car or written it off.

Other scenarios where car insurance excess comes into play are theft claims and any claim involving a single vehicle, such as skidding on black ice and smashing into a lamppost.

Compulsory excess

Compulsory excess is the set amount you must pay to your insurer if you make a claim on your car insurance. It can differ depending on the driver, the type of car you drive and your insurer’s assessment of risk.

Your insurance company will consider several risk factors when calculating the amount such as:

• Your age
• Type of claim
• Age of your car
• Type of car
• How long you have held a driving licence

In terms of age, a learner with a provisional driving licence presents a greater insurance risk. Therefore, they will face a higher excess than a parent on the same policy holding a driver’s licence for more than nine years, because the insurer is taking more of the risk.

As for the type of car, the compulsory excess on a performance car in a high Thatcham insurance group (or new vehicle risk rating) will typically be higher than that in the low to mid-range grouping. Insurance groups rank cars from 1 to 50 based on the vehicle’s risk and therefore how likely it is for the car to be involved in a claim. The new vehicle risk rating system will see each car scored from 1 (low risk) to 99 (high risk). Generally, the higher the insurance group or the vehicle risk rating, the more expensive the car is to insure. However, many insurers now use their own classification systems, which may differ from the standard groupings.

Your compulsory excess may also increase if you choose a garage that differs from your insurer’s approved repairer.

voluntary excess

Voluntary excess is the amount you choose to pay towards the cost of claims you make if you have an accident, damage your car or just your windscreen, your car catches fire or it’s stolen. You can select the amount when you are buying or renewing your car insurance.

When choosing your insurance excess, it’s important to select an amount you could comfortably pay if you need to make a claim. Remember, if the cost of a repair is less than your chosen excess, your insurer will not pay out for that claim. Setting your excess too high could mean you have to cover the full cost of smaller repairs yourself, which could create unexpected financial pressure.

how does car insurance excess work?

When making a car insurance claim, the insurer calculates the total excess (voluntary and compulsory) you must pay and deducts it from the repair bill.

Let’s say your policy has a voluntary excess of £200 and a compulsory excess of £100. An accident damages the car, and the repair bill comes to £3,000.

Insurance excess works like this:

1. Add the excess amounts together: £200 + £100 = £300 for you to pay
2. Deduct the £300 total from the £3,000 repair bill = £2,700 for the insurer to pay

In practice, you would contact your insurer and report the accident and any damage it caused. The insurance company then arranges for repairs at one of its approved garages, or you can get quotes from a garage of your choice.

You pay £300 directly to the garage once it has repaired the vehicle. Your insurer then pays the balance of £2,700 to the garage, so both payments cover the repair bill.

do you have to pay both compulsory and voluntary excess?

Yes, when you make a claim, you will need to pay both the voluntary and compulsory excess amounts. You cannot pay one but not the other.

does raising your voluntary excess make your car insurance cheaper?

Raising your voluntary excess could make your car insurance cheaper, but you should consider the following points before contacting your insurer:

• You must be able to afford to pay the voluntary and the compulsory excess in any claim scenario.
• Your insurer pays nothing if the repair costs are lower than or the same as the excess. So, if the bill in our example were £300 instead of £3,000, you would pay all of it because your total excess of £300 is the same amount as the bill.
• Some policies can increase their compulsory excess yearly, so you need to keep an eye on the figures when you receive your renewal documents.

Be sure to balance the risk of paying the excess upfront against the savings you may achieve in premium payments whenever you take out or renew a car insurance policy. It’s also true of any other policy involving excess payments, such as home or travel insurance.

do you have to pay excess if you're not at fault?

You won’t usually pay an excess if another party is proven to be at fault and their insurer accepts responsibility. However, you may need to pay it upfront and reclaim it later, depending on the circumstances.

Uninsured drivers

At Ageas, our Uninsured Driver Promise means drivers with comprehensive insurance do not spend anything when an uninsured driver has caused the damage, provided the criteria outlined in our policy wording are met – we reimburse your excess and reinstate your no-claims discount.

Learn what happens when an uninsured driver hits you.

Third-party claims

Another scenario where you could get your excess refunded is if someone else makes a claim against your insurance, or you make a claim against a third party. You’ll still need to pay the excess upfront, but if your insurer is able to recover the costs from the other person or their insurer, they’ll give your excess back. During this period, you may temporarily lose your no claims discount (NCD) until fault is confirmed.

Find out about third-party assistance claims.

can your insurance excess affect your car insurance?

Compulsory insurance excess can impact your car insurance in the following ways:

• It keeps overall insurance premiums lower by deterring small claims
• It can rise or fall depending on your insurer’s assessment of your risk as a driver, determined by factors such as your age, claims history, vehicle type and location.

Voluntary insurance excess may decrease your insurance premiums, depending on factors such as your no-claims discount and the amount you agree to set.

As explained, you should balance what you can afford to pay in excess against the lower premiums you’ll generally get. Typically, the higher the excess you pay, the lower the premium, but this means you’ll have to pay more when making a claim.

Thinking about car insurance? Learn more about Ageas car insurance.

FAQs 

how much should my voluntary excess be?

The amount of your voluntary excess will depend on your financial circumstances and how much you can afford to pay towards the cost of your claim.

can you change the excess on your car policy after you've bought it?

You can change your voluntary excess after buying your policy, but this will affect your premium and can’t be done if you have an open claim. The change may also involve paying an admin fee, depending on your insurer.

The compulsory excess on your policy can't be changed. Your insurer sets this figure after analysing the risk factors that make accidents more or less likely.

when might you pay a different or additional excess?

You might pay a different or additional excess if you are a young driver, use a non-approved repairer, or have a high excess policy amount due to driving a high-performance vehicle or sports car.

what does an excess of £500 mean?

An excess of £500 means that if you make a claim on your policy, you will be responsible for paying the first £500.

is it better to have high or low car insurance?

The question of whether to have high or low car insurance excess depends on various factors, not least your attitude to risk and your financial circumstances. Ask yourself whether you can afford to pay a high car insurance excess or you’d prefer the insurer to shoulder a higher percentage of the risk.

can you refuse to pay excess?

You cannot refuse to pay an excess as it’s a contractual agreement when you purchase your policy.