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How does car insurance excess work?

Matt Fernell photo
Written by Matt Fernell, Financial Content Writer

19 May 2020

When you claim on your car insurance, you usually still need to pay some money yourself. This is called your excess. Here is everything you need to know about car insurance excess.

Man in a wheelchair wearing a red jumper and black gilet, opening the door of a car.

What is car insurance excess?

It is the amount of money you have to pay when you make a car insurance claim.

You only need to pay the excess if you are to blame for any damage caused and your insurer is paying for the repairs.

Your excess is made up of two parts:

  • Compulsory excess: This is the amount set by the insurance company that you must pay in the event of a claim.

  • Voluntary excess: This is an optional amount you can add on top of the compulsory excess to reduce the price of your car insurance premium.

These two amounts are often combined into one excess amount when you get a quote, but not always so check the policy carefully.

How much excess do you need to pay?

Your total excess can be calculated by adding the compulsory and voluntary amounts together.

For example: If your policy has a compulsory excess of £150 and you add a voluntary excess of £250, you will need to pay £400 if you claim.

  • Already insured? You can find out how much your excess is by checking your policy documents or by contacting your insurer to find out.

  • Looking for cover? If you are applying for a new policy make sure you check the compulsory excess before you decide whether to add a voluntary amount to your cover.

Young drivers' excess

Many insurers charge a higher compulsory excess if you are a young driver because young drivers are seen as more likely to be involved in an accident. Insurers offset the risk by increasing the amount you would need to pay if you make a claim.

For example an insurer might charge:

  • £400 for drivers under 21 years old

  • £250 for drivers between 21 and 25 years old

  • £150 for all other drivers

Remember, this is the compulsory excess amount, so adding a voluntary amount would make it even higher. This guide explains what else you need to look out for if you are looking for cover as a young driver.

What if you cannot afford the excess?

If you do not have the money available to pay the excess your insurer may refuse your claim, or deduct the amount from what they pay towards the repairs.

For example, if you make a claim for damages worth £2,000 but cannot afford to pay the £250 excess, your insurer will only pay the remaining £1,750. You would need to arrange to pay the outstanding amount with the garage.

Check the policy to find out where you will stand.

Is it worth increasing your voluntary excess?

Choosing to increase your excess amount can mean you pay less for your insurance policy. However if you need to make a claim you could end up paying more overall.

For example:

Annual comprehensive policy quotes for an 18 year old living in Swindon driving a 2013 Ford Fiesta Zetec with no years' no claims bonus*:

Voluntary excessPrice of cover
£500 £1,345.30
*Quote from Admiral, November 2016.

In this example the driver could save £478.50 on an annual policy if they choose to add £1,000 voluntary excess compared to not adding any.

However, in the event of a claim the driver will need to pay £1,000 plus the compulsory excess, so would be £521.50 worse off than if they had chosen a voluntary excess of £0.

Increasing your excess is only worth doing if you are confident you will not need to make a claim, so think carefully before you choose to pay more.

Can you insure against paying your excess?

Yes. You can take out a separate excess insurance policy that will cover the cost if you have to make a claim.

You would still need to pay the excess amount upfront in the event of a claim, but you can then get it back from your excess insurance policy.

To work out if an excess insurance policy is worthwhile, consider how much the cover will cost versus the savings you will see for increasing your voluntary excess.

For example, if an excess insurance policy costs £50 to cover an excess amount of £1,000, it would be worth considering if increasing the excess amount saved you more than £50 on the cost of the policy.

Compare excess insurance

Whatever car you drive, make sure you find insurance that covers everything you need as cheaply as possible by comparing all of the policies out there.

Compare car insurance

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