Understanding car insurance excess

What is car insurance excess?

Car insurance excess is a compulsory amount that you pay towards a claim when you're at fault or if your insurer has to pay for a repair. Usually, when you get your payout after a claim, your excess is deducted from this.

There are 2 different types of excess, compulsory and voluntary. You have to pay your compulsory excess. The cost of this varies depending on your insurer, age, the car you drive and your experience.

You can set the amount for your voluntary excess, and it can even make your insurance price cheaper. But, always make sure you can afford the total amount if you have to claim.

Make sure you check your policy documents for the exact amounts you pay towards your excess. Also, certain things like windscreen cover might have separate excesses - often for repair and replacement. These are usually smaller than your complusory or voluntary excess amounts. But it's worth knowing what they are, just in case you do need to claim.

What's the difference between voluntary and compulsory car insurance excess?

In short, the difference between a voluntary and compulsory excess is that you can choose to include a voluntary excess on your policy. Your insurer will set the compulsory excess. Here are the other key differences at a glance:

How much car insurance excess do you pay?

Compulsory excess typically ranges from £200-£300. But it could be more or less than this, depending on your risk factors.

You can set your own voluntary excess, but most choose to pay between £200-£300. Some insurers might even let you pay £500 towards a claim. Just remember that higher total excesses might make claiming less worthwhile.

To get your total excess amount, just add these 2 numbers together. You can find out how much excess you're paying in your policy documents.

Here's an example of how your excess works when it comes to claiming. Take, for example, that you're making a claim for £2,000:

• Your compulsory excess is set at £250

• Your voluntary excess is set at £150

That means your insurer would deduct £400 from your payout to cover the excesses, leaving you with a pay out amount of £1,600.

Do younger drivers pay a higher car insurance excess?

Yes, younger drivers pay more for their compulsory excess than older drivers. That's because younger drivers are more risky than older drivers due to a lack of experience on the road. For example, an insurer might charge:

• £400 for drivers under 21

• £250 for drivers between 21 and 25

• £150 for all other drivers

Younger drivers can still choose their voluntary excess though.

The type of car you drive can also influence your compulsory excess amount. For example, high-performance or luxury cars are usually charged a higher compulsory excess.

What are the potential drawbacks of a high excess?

There are a couple of drawbacks to a high excess.

The first is that your insurer won't usually pay out for a claim that's less than your excess.

Another reason is that it might mean certain claims aren't worth making. For example, if your total excess came to £400, and you were claiming for something worth £500, you'd be left with just £100 as your final pay out.

In this case, it's probably worth paying the full £500, so you don't lose any no claims bonus you've built up.

What happens if you can't afford to pay your car insurance excess?

If you can't pay your excess, your insurer might refuse to pay your claim. They might also deduct the excess amount from your pay out.

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.

Always check your policy documents to check what happens in this scenario.

If you think you'll have problems paying your excess (particularly your compulsory excess), speak to your insurer before you need to claim. They might offer a payment plan or give you options to make it more affordable for you.

Do you pay excess if the accident isn't your fault?

Typically, no. If an accident isn't your fault, usually the other party's insurer will pay the claim. So your excess should be left alone.

Though there are some scenarios where you might need to pay your excess. For example:

• If fault isn't clearly established

• If the other party is uninsured or untraceable

• If you claim on your own policy for damages that aren't covered by the other party's insurer

If you initially pay the excess, then your insurer finds you weren't at fault, you can usually get your excess payment back. If the other driver is found liable and accepts the fault, your insurer will recover their costs (including your excess) from them.

As soon as your insurer gets that money back, they should pass on your excess refund. This can take months - it all depends on how quickly the other insurer settles.

When it comes to your no claims bonus (NCB), in this scenario your insurer might temporarily reduce it while your claim is being settled. If they find you're not at fault, your insurer will reinstate your NCB. Because your NCB means a discount on premiums, if you bought insurance while your NCB was reduced, your insurer might refund the difference.

What is car insurance excess insurance?

Excess insurance sits alongside your car insurance and covers the cost of your excess if you have to make a claim. You would still need to pay the excess initially if you 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 saving you'll see for increasing your voluntary excess.

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

Keep in mind that excess insurance only pays out when your car insurance provider pays out for a claim. This means the claim has to be worth more than the excess.

If you had an excess of £1,000 but the claim was only worth £700, neither your car insurance policy nor your excess insurance policy would pay out.

Can I claim back my car insurance excess?

If you're in a situation where you've paid an excess but feel you shouldn't have, you might be able to claim it back. Here's a step-by-step on how to claim back your car insurance excess:

1. Wait until your insurer has confirmed liability

Your insurer will look into who was responsible for the incident and collect evidence. They'll then liaise with the other driver's insurer. You can't claim your excess back until the insurers have found out who's at fault. This can take some time.

2. Your insurer recovers the costs

If you're found to not be at fault, your insurer will recover the costs from the other party's insurer. This'll include your excess. Once they get the money back, they'll automatically refund your excess.

3. If you have excess protection insurance

It's simpler if you have excess protection insurance. You still have to pay your excess upfront, but you'll claim it back directly from your excess insurance provider. You don't claim this from your car insurance provider. You just need to send these things to your excess protection provider:

• Proof you paid your excess (such as an invoice or statement from your insurer)

• A copy of your settlement letter or claims report showing the claim was valid

If these documents are all fine, they should refund your excess within a couple of weeks. The good thing about this is that they don't have to wait for the other driver's insurer to pay up.

4. If the other driver is uninsured or untraceable

To recover your excess if the other driver is uninsured or untraceable, you can contact the Motor Insurers' Bureau (MIB). They should recover the cost of your excess as long as the other driver was at fault and you reported the incident to the police.