What is Car Insurance Excess?
Car insurance excess explained
Car insurance is legally required to drive in the UK, and when you purchase cover, providers will often talk about a voluntary and compulsory ‘excess’ amount.
But what is car insurance excess? This guide will give you everything you need to know, including:
Being involved in a car accident is a stressful experience, but it can become far more stressful if you cannot afford to pay the excess amount.
In order to set the right voluntary excess for you, it’s important that you understand exactly what it means…
Car insurance excess is an agreed amount of cash that you would be willing to pay towards a claim if ever you made one (to cover damages after an accident, for example).
The excess amount is usually agreed when you take the insurance policy out and is typically made up of two types: ‘voluntary excess’ and ‘compulsory excess’.
For example, if you have a compulsory excess of £200 and a voluntary excess amount of £150, you are agreeing to pay £350, in total, towards the cost of any claim you make on that insurance policy.
As a rule of thumb, the higher the excess amount is, the cheaper your car insurance premiums are likely to be.
So, voluntary vs. compulsory excess – what’s the difference?
Compulsory excess is a fixed amount set by your insurance provider – it cannot be changed and is usually slightly more than the average voluntary excess.
Additional compulsory excess
Some policies can also include additional compulsory excess, for certain drivers who fall within higher risk categories.
For example, drivers under 25 could be required to agree to additional young driver excess due to the provider considering them more of a risk than others.
Additional compulsory excess could also be added to your policy if you drive a high-performance or luxury vehicle, as the potential costs of repair are likely to be higher.
The average compulsory excess is set around £200 to £300 in the UK, but the amount you’re offered will depend on factors such as your experience, the car you drive, the required level of cover, and so on.
You do have to pay the compulsory excess set by your insurer, and there is usually no room for negotiation. You might, however, find a lower compulsory excess with a different provider, so be sure to shop around before committing to a car insurance policy.
What is voluntary excess on car insurance?
Voluntary excess is slightly different to compulsory excess, as it is an amount chosen by you – hence the ‘voluntary’ label.
If you have a voluntary excess of £150, for example, that is the amount that you’re voluntarily willing to pay towards the cost of a claim. It is added to the compulsory excess in order to make up the total excess amount.
Remember, the higher your voluntary excess is, the cheaper your car insurance premiums will be, in most cases.
But you should only ever have a voluntary excess that you can afford; setting the amount too high could place you in a tricky financial situation if you’re not able to pay it.
Although it is better to have a higher voluntary excess as you will reduce your premiums, you should never set it to an amount that you will not be able to cover if ever you need to make a claim.
How much voluntary excess should I pay?
The voluntary excess is an amount that the policyholder (you) decides, therefore providers will allow people to either increase or decrease it if they wish. Each insurer is different, but you should be able to find out how to change your voluntary excess by giving your provider a call.
If you feel that you’re a very safe and low-risk driver, it may be worth increasing your voluntary excess, as it could lead to cheaper premiums. But, as previously mentioned, it’s crucial that you only set an excess amount that you can afford to pay comfortably, should you ever need to claim.
If you make a claim and are unable to pay the car insurance excess, you will only put yourself in further financial difficulty. Remember to be realistic when setting your voluntary excess amount and keep in mind that you will need to pay that excess (on top of the compulsory excess) if you are ever involved in a car accident claim.
Unlike voluntary excess, compulsory excess is set by the provider and you have no say in the amount, as it is calculated using your age, experience, and the car you drive in order to determine the risk you pose. The higher risk you pose to insurers, the more your compulsory excess amount will be.
When do you pay excess on car insurance? You pay both voluntary and compulsory excess on your car insurance whenever you are involved in a car accident claim, but it is possible to claim the amount back if the incident was not your fault.
If you have excess insurance in place – also known as an excess waiver – you are able to recover the amount you pay in excess towards any claim you make.
You would be required to pay premiums, as with any form of insurance, but it is a cost that could become in handy if ever you do need to claim.
See our full guide for more information on excess insurance.
Windscreen excess (or glass excess) is also included in the majority of car insurance policies, so be sure to check with your provider when you take out cover.
This excess being included in your policy means that you will be required to pay a small excess if your windscreen is damaged.
Some policies waive the excess if the damage can be repaired, but if the windscreen has to be replaced, you’re likely to be charged an excess fee.
Initially, you will still pay car insurance excess regardless of who was to blame for the incident, but there’s good news, your provider will typically try to claim back the amount you paid from the at-fault party’s insurance provider.
If the other driver involved in the incident cannot be identified, or has no insurance in place, it’s possible that you may not get any of the excess you paid back. This is where excess insurance could come in handy – as it pays back any excess you’re required to pay through your car insurance.
What happens to your excess after an accident? Well, once a driver has been involved in an accident, it’s not unusual for their compulsory excess to rise due to the increased risk of being in another accident, so be wary and keep an eye on any emails or letters from your provider.
Can I pay my car insurance excess in instalments in the UK?
If you find that you’re somehow in financial difficulty when you need to make a claim, it is naturally going to be difficult for you to pay the insurer up-front, especially if you previously set a high voluntary excess amount.
To help you out, some comprehensive car insurance providers in the UK now offer schemes that allow you to pay your excess in monthly instalments.
Contact your provider and see whether they offer such a service, as it could help you out in the long-run.
We've explained voluntary excess, but how else can you get cheaper car insurance?
Increasing the voluntary excess on your car insurance policy is not the only way to get cheaper cover – there are many things you can do that could result in more affordable premiums, even if you’re a new or learner driver!
Here at Compare UK Quotes, we’re constantly scouring the industry for the best deals for our visitors, especially when it comes to insurance.