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All motor insurance policies come with an excess, which is the amount you have to pay towards any claims. Here, we answer your questions about this element of car cover.
What is a car insurance excess?
As explained above, an excess is the amount you must pay towards any claims you make on your policy. It is split into two parts: compulsory (sometimes referred to as ‘mandatory’) and voluntary. The compulsory excess is the minimum amount stipulated by the insurer. The voluntary excess is the amount on top of this that you choose to pay towards any claims. So, say the compulsory excess was £200, and you chose to increase this by adding a voluntary excess of £100, you would have to pay a total of £300 towards the cost of any claim. In other words, if you made a claim for £800, you would cover the first £300, leaving the insurer to pay the remaining £500. When you run a car insurance quote, the excess shown on the results page will often assume a voluntary excess of a certain amount. There’s a box at the top of the page that allows you to choose a different amount.
Why do insurers include an excess on their policies?
Insurers do not want drivers claiming for every little bump and scratch. If that were the case, their administration costs – and your premiums – would go through the roof. They therefore insist on drivers paying the first part of any claim themselves as a way of preventing claims for minor repairs costing less than, say, £200. According to insurer Admiral, an excess is “to deter people making lots of claims for minimal damage that nevertheless might soon add up. The excess makes sure your insurance is there to help when you really need it.” What is a compulsory excess? A compulsory excess is the minimum excess that an insurer will allow you to pay towards any claim. The level of the compulsory excess depends on the details you provide when applying for a quote. In many cases, it is set around the £200 to £300 mark. However, it may be higher if you are a young driver or have a very high value car. In some instances, there will be no compulsory excess applied – although the insurer is likely to suggest a minimum voluntary excess in such cases.
What is a voluntary excess?
A voluntary excess is the amount you agree to pay towards any claims above and beyond the compulsory excess. Voluntary excess levels generally start at about £50, and can go up to £1,000 or more. Some people agree to a higher voluntary excess in a bid to negotiate a lower premium. Remember, though, that you will have to pay the amount set should you make a claim, so it must remain affordable.
What happens if I make my voluntary excess higher or lower?
Insurers often reward drivers who agree to higher voluntary excesses with lower premiums. The reason is simple: the higher the amount you agree to pay towards any claims, the less you are likely to cost an insurer during the course of your contract. You may therefore notice that the premium quoted rises when you choose a low level excess, and falls when you opt for a higher one – although this is not always the case.
Are there limits on how high or low I can go?
When making a claim on your policy, you almost always have to pay the compulsory excess set by the insurer (see below for examples of when this is not the case). Above that amount, however, it is you who decides how much more you pay.
Most insurers set the maximum voluntary excess at a few hundred pounds, although some will allow you to choose to pay up to say the first £1,000 of any claim. But beware: while a high excess can save you money on your premiums, it will also make it pointless claiming for even fairly major repairs.
Do I always have to pay the excess?
You may be able to make certain, generally minor claims without having to pay an excess. Windscreen repairs, for example, are often treated this way. In all other cases, however, you will always have to pay the excess amount towards the costs incurred by your insurer. There are some circumstances in which you can get the money back, though.
If, for example, you are in an accident that was not your fault and your insurer is able to recover the full cost from the other party’s insurance provider, the excess should be refunded.