What is Car Insurance Excess?

7th February 2018

By Adam Smith

Confused about car insurance excess? Not sure what it all means or how much is suitable for you? Understanding the difference between compulsory and voluntary excess amounts is important for anyone driving on the road today. It could be the difference between making a saving and paying well over the odds.

The amount of excess you agree to can affect your annual insurance price as well as the rate you would have to pay if you were to put in a claim after theft, damage or an accident. So, getting to grips with how it works and finding the best policy to suit your needs is very important.

Read on for advice on the different levels of excess cover and how to find the best car insurance deals online:

What is car insurance excess? 

The excess (in some cases known as the ‘deductible’) is the fixed amount of money that you will be required to pay for every claim you make. This figure will be deducted from the total price of the parts, labour and repair bills and your insurance company will cover the rest.

For instance, if your claim is for £1,000 and the agreed excess is £200, your insurer will pay the remaining £800 difference.

The reason for car insurance excess is to manage the number of claims that come in each year. This regulates the number of small claims and also deters incidents of fraud which could disrupt the market and drive up insurance prices for everyone.

Insurance should be used for big claims and setting an excess helps to control this, preventing inflated premiums in the future. Although, there are some situations where it is not a compulsory requirement.


How much will my excess be?

Excess amounts can differ for everyone. It can depend on your age, your years of experience as a driver or the type of car you drive (such as make and model). The minimum you are expected to pay is the compulsory excess as set by your insurer. This is the lowest fixed amount that you will owe for each claim. Almost all policies will have a set compulsory figure.

New drivers or owners of performance cars usually pay a much higher excess. Some cars, such as sports cars, can be total insurance traps and will bump up your excess and/or premium to extortionate levels. When shopping around for a new vehicle, do your research and buy something you can afford to insure.

A standard compulsory amount is usually around £200 to £300, whilst some of the higher amounts can be over £1,000.

In some cases, your insurance company may not request a compulsory excess at all. However, in this instance, they would suggest a minimum amount to you when you sign up.


What is voluntary excess?

There is compulsory and voluntary excess – it’s vital to learn the difference if you want to get the best deal. Your compulsory excess is the minimum amount that your insurance company wants you to pay. But as the customer, you also have the option to increase this to reduce the total cost of your policy. This is known as voluntary excess.

Generally, the more voluntary excess you choose, the lower your insurance. Voluntary amounts start from as little as £50 extra to £1,000 or more, so it really is up to you how much more you would like to pay.

The higher you go, the cheaper your premium, but remember that the rate you agree is what you will have to shell out if you decide to make a claim. Always make sure the rate is affordable to prevent getting into debt at a later date.

Lower vs higher excess

Should you go lower or higher? This is the biggest conundrum for most of us. Unfortunately, there are no absolute answers to help you decide. It very much depends on you, your lifestyle, and your driving habits.

Some factors to consider include how many years you’ve been driving for, how confident you are as a driver and how often you use your car. Do you do a lot of driving on the motorway? Are you always out during rush hour/high traffic periods? If you spend a lot of your time in the car, a lower excess may be more suitable.

For drivers who don’t spend as much time on the roads (and are perhaps less likely to get into accidents), car insurance with higher excess is a great way to lower your outgoings. People who consider themselves careful drivers are the most likely to opt for a low excess, but remember, accidents can still happen no matter how cautious you are. Try to find a balance that won’t leave you with a massive bill should you be caught up in a collision.

When do I pay the excess?

You will pay when you make a claim for a road accident, theft or damage while parked and the same process will apply for all three types of claims. For accidents, you will be required to fork out the excess no matter who is at fault. However, if there is proof that another driver is to blame and the full cost of damage is recovered from their insurance company, you should be able to get a refund.

For small bumps caused by yourself, it may not be worth putting a claim in at all. Be sure to double check what your excess amount is before taking the next steps. If the repairs cost less than your excess, notifying your insurer isn’t going to be worth it. Not if you end up paying the whole amount yourself anyway as well as affecting your no claims bonus.

If you cause damage to another vehicle or injure another person, then it’s crucial to have your insurance agency involved. This is when the charges can really add up and you will need a good plan to cover you in this instance.

What is excess protection?

Car excess insurance protection is an additional policy that is offered by some providers. These extra insurance packages are designed for added peace of mind and better protection for your money. Typically, they will cover your full policy excess amount; compulsory and voluntary combined.

You will be able to claim back for excess payments made to your insurer, with a limited number of claims per year. For instance, AA allows for one claim each year, meaning if you have two road accidents during a 12-month period, you will only need to lose out on excess once.

Whilst these policies can help you get your money back after an incident, they can also be an unnecessary expense, particularly for drivers who are unlikely to make a claim. Unless you are really concerned about the high cost of excess, a protection policy may not be worth investing in at all.

How to find the best deal online

When choosing your car insurance, it’s important to shop around. Using an online comparison service is a great way of doing this. By using a comparison tool, you will be able to compare different car insurance prices and browse competitors based on the excess amount and other deciding factors.

There are a number of ways you can negotiate a better deal with your insurer, including securing your car, driving fewer miles, getting a joint policy and agreeing to a bigger excess payment. But remember that a higher excess still needs to be affordable for your situation. Choose a deal that works for you in the long run and in every scenario.

If your car insurance is up for renewal, it could be time to review your agreement. If you’ve had no accidents or claims, it could be worth increasing your voluntary excess amount to drive down the premium. Or if you’ve been involved in a number of road collisions, you may want to consider lowering your excess and taking the hit with a more expensive plan.

A large percentage of drivers let their insurance policies auto-renew year after year, without questioning the price, checking out competition or assessing whether the policy is still the best one for them. Research has shown that renewed policies come at a greater price, often well above the inflation rate, so never let your policy renew without comparing car insurance quotes from rival companies first.

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