Understanding car insurance excess matters when choosing a policy that fits you. This often-misunderstood element impacts both your premium costs and out-of-pocket expenses when claiming.
Below, we explain what car insurance excess means, how it affects your policy, the different types of excess, and practical tips to help you make informed decisions about your car insurance coverage in the UK.
Understanding Car Insurance Excess: The Basics
Car insurance excess is the amount you agree to pay towards any claim before your insurer covers the remaining cost. Think of it as your financial contribution towards a claim. For example, with a £250 excess and a £1,000 damage claim, you pay the first £250 while your insurance provider covers the remaining £750.
This system helps insurers manage risk and discourages trivial claims. It also gives you some control over your premium costs – generally, the higher your chosen excess, the lower your premium might be.
Compulsory vs Voluntary Excess: What is the Difference?
Understanding these two main types of excess is key for evaluating any car insurance policy.
Compulsory excess
The insurer sets this, and it is non-negotiable. This amount varies based on factors including your age, driving experience, claim history, and vehicle type. Young or inexperienced drivers typically face higher compulsory excess amounts due to their statistically higher risk profile.
Voluntary excess
This is the additional amount you choose to pay on top of the compulsory excess. Opting for a higher voluntary excess often lowers your premium payments but means contributing more if you need to make a claim.
Your total excess combines both figures. With a £200 compulsory excess and a £300 voluntary excess, you will pay £500 towards any claim, for example.
How Excess Impacts Your Car Insurance Claims
When making a claim, your excess affects the process in the following ways:
- Claims below your excess amount – If damage costs less to repair than your total excess, it is not worth claiming as you’ll bear the full cost anyway.
- Claims slightly above your excess – Consider whether the potential premium increase at renewal might outweigh the claim benefit.
- Non-fault claims – You may need to pay your excess initially while your insurer recovers costs from the at-fault driver’s insurance.
- Third-party claims against you – Your excess does not apply to claims made against you by third parties, only to claims for your own vehicle.
- Multiple claim types – Different excesses may apply to windscreen, fire, theft, and accident claims.
Understanding these scenarios helps you decide when making an insurance claim makes financial sense.
Special Considerations for Excess in UK Policies
Some UK insurance policies feature unique excess arrangements worth knowing about. Windscreen excess differs from the standard policy excess, being much lower. Some policies even offer windscreen repair with no excess.
Another thing to keep in mind is that specified driver excess may apply when someone named on your policy (who isn’t the main driver) drives the car. This excess could be higher than the standard excess.
Young drivers face higher excess amounts – sometimes £1,000 or more for drivers under 25. This reflects the elevated risk associated with less experienced motorists. Additionally, some insurers implement time-specific excess, with higher amounts for claims during high-risk periods, such as late-night driving.
How to Choose the Most Suitable Excess Amount
Selecting the appropriate excess requires balancing immediate premium savings against potential future costs:
- Consider your financial situation – Choose an excess you could comfortably afford to pay after an accident.
- Evaluate your risk profile – A lower excess might be prudent despite higher premiums if you drive frequently in high-risk areas.
- Calculate the premium impact – Ask insurers how different voluntary excess amounts would affect your premium.
- Consider your vehicle’s value – For lower-value cars, a high excess might mean minimal payout after a total loss claim.
- Review your no-claims bonus – Consider whether you would actually make small-to-medium claims that would risk this discount.
Excess Protection Insurance: Is It Worth It?
Some drivers opt for excess protection insurance—an additional policy that reimburses your excess payment following a successful claim. This cover costs around £30-£60 annually and is valuable if you’ve selected a high excess to reduce premiums.
Before purchasing, check what is covered. Some policies only apply to certain claim types or have their own exclusions. Compare the annual cost against your excess amount and claim likelihood to determine if it represents good value.
Common Misconceptions About Car Insurance Excess
Some UK drivers misunderstand certain aspects of insurance excess:
- “I won’t pay excess if the accident wasn’t my fault” – While theoretically true, you may still need to pay initially while your insurer recovers costs.
- “Excess applies per policy, not per claim” – You will pay your excess for each separate claim, not just once per year.
- “Excess is the same for all claim types” – Different claim types may have different excess amounts in your policy.
- “Protection prevents premium increases” – Excess protection only reimburses your excess payment; it doesn’t prevent premium increases after claims.
- “All insurers handle excess the same way” – Policies vary greatly between providers, particularly regarding non-fault claims.
Making Smart Decisions About Small Claims
Sometimes, paying for minor damage yourself rather than claiming makes financial sense. When thinking about whether to claim, follow these steps:
- Calculate the repair cost versus the claim amount after the excess deduction.
- Estimate the potential premium increase over the next 3 years resulting from losing NCB.
- Compare the total premium increase against the immediate repair cost.
- Consider the impact on your NCB protection status.
- Remember to report accidents to your insurer even if you don’t claim.
Visit our insurance articles and resources section for more guidance on claims and related insurance topics.
Expert Support for Your Insurance Decisions
Understanding car insurance excess shouldn’t be complicated. Advance Insurance helps motorists choose the most suitable excess levels for their circumstances. Our experienced team can explain how different excess choices affect your premium and overall financial position.
With deep experience in the UK motor insurance market, we offer personalised advice tailored to your needs. Whether insuring your first car or reviewing existing cover, our specialists can help balance premium costs against excess levels.
Contact our vehicle insurance experts for a consultation about your car insurance options. We’ll help you understand the implications of different excess amounts and find a policy that protects you with an excess level that suits your budget and circumstances.
