What is car insurance excess?

What is excess insurance? 

The higher your excess is, the lower your premiums should be (and vice versa). This is because the more you’re willing to pay in excess, the less the insurer will need to contribute towards your claim. But it’s best to set a realistic limit, or you could risk financial difficulties in the event of an accident. 

Taking out excess insurance is worth considering if you wouldn’t have enough funds to pay the excess.  

It covers the cost of the excess you have pre-selected, but it comes with a price tag of around £20 a year. This is on top of your standard car insurance. 

The exact cost of excess insurance varies depending on a number of factors, including: 

• the insurer
• your driving record
• the value of the excess you’re covering 

Note, the higher your excess contribution is, the more expensive your excess insurance will be. 

Tip: Weigh up the cost of excess insurance and compare it to any savings you’d make by selecting a higher excess. This will help you to work out if it’s worth buying.

When do you have to pay the excess? 

You only need to pay the excess if you make a claim. Often the amount due is deducted from an insurance payout, rather than demanded upfront. 

In most cases, if an accident wasn’t your fault, you'd still have to pay the excess. However, you should have the option to claim it back from the other party’s insurer. That’s why it’s important to get their details at the scene. 

Bear in mind, claiming on your insurance could give lenders the impression that you are high risk. They may increase your premiums and compulsory excess when you renew your policy. 

You may decide against making a claim, in which case you wouldn’t have to pay the excess. Perhaps you’ve been involved in an accident, but the cost of repair work is lower than the excess, for example. Or you’d rather keep your no-claims bonus and keep your premiums down. 

Tip: Check your policy documents to find out what is and isn’t included. You can get the details from your insurance provider if you don’t have them to hand. 

What kinds of excess insurance are available? 

There are two main kinds of excess insurance available:

• ‘Single policy’ excess insurance - covers the excess on one insurance policy.
• ‘Lifestyle’ excess insurance - covers the excess for more than one insurance policy in your name (such as home and travel insurance, for example).

The difference between voluntary and compulsory excess 

The total excess you pay is part compulsory and part voluntary: 

• Compulsory excess is fixed by your insurance company and is non-negotiable. The amount you pay varies depending on factors such as your age, car and your driving record, for example.
• Voluntary excess is optional. It’s the amount you’d be willing to pay if you were to make a claim. This is on top of the compulsory excess. You can increase or decrease it depending on your affordability. 

Can I change my insurance excess? 

You can change your voluntary insurance excess depending on your affordability. You cannot change the compulsory excess set by the insurer. 

We suggest you cover the full amount of your excess contribution so you’re not left out of pocket if you need to make a claim. Don’t set it any higher than your excess limit, or you’ll end up paying more than you need to.