What is car excess insurance?
Find out what excess insurance is and why it may be useful if you make a claim on your car insurance policy.
Key takeaways
Excess insurance covers the cost of the excess you pay when making a car insurance claim
It can cover both the voluntary and compulsory excess of between £250 and £1,000
Excess insurance can provide peace of mind if you can’t afford to pay the excess
What is excess insurance?
Excess insurance covers the cost of the excess you pay if you make a claim on your car insurance. The amount covered is usually a pre-agreed limit and it can apply to both the voluntary and compulsory excess.
How does excess insurance work?
When you buy excess insurance, you choose the upper limit of which it will pay out. This is usually between £250 and £1,000.
If, for example, your total excess is £500, including both compulsory and voluntary excess, you can take out excess insurance to cover this amount. The higher the amount you want to cover, the more expensive your insurance will be.
Your excess insurance will pay out once you have provided evidence that you have made a successful claim on your car insurance.
What are the different types of excess insurance?
There are two types of excess car insurance – single and lifestyle:
Covers the excess on one insurance policy only.
This will cover excesses on other policies you may have – and not necessarily just other car insurance policies. It could also cover the excesses on your home, travel, medical and pet insurance.
Remember, with lifestyle excess insurance you will still be limited to the excess insurance claims cap you have paid for. If, for example, your annual policy covers up to £500 of excess, and you make a claim on both your car and home insurance in the same year, your insurer won't pay out more than the £500 cap.
Single policy excess insurance
Lifestyle excess insurance
What is the difference between a compulsory and a voluntary excess?
When you take out car insurance, your policy will have what is called an excess, displayed as a sum of money. If you make a claim, you will be required to pay the excess as a contribution towards the full cost of the claim.
In most instances, you don’t physically pay the excess as a separate amount - rather, the sum is deducted from the amount the insurance company pays you. This is why you may see the excess described as the ‘deductible’.
Insurers impose an excess to help eliminate small claims. It is usually split into two parts:
This is non-negotiable and is set by your insurer
You choose the level of the voluntary excess, which is added to the compulsory excess.
Compulsory (or mandatory) excess
Voluntary excess
Choosing a higher voluntary excess to add to the compulsory excess will help bring down the cost of your car insurance premium because the insurer won't have to pay out so much in the event of a claim.
But doing this does mean you'll have to pay the extra cost if you have to claim, so keep the voluntary excess realistic.
Should I take out excess insurance?
Choosing a higher voluntary excess on your car insurance is an easy way to reduce the cost of your premium. But if you need to make a claim, you could be left paying out a high amount.
If you are worried you would not be able to afford to pay your excess if you made a claim, excess insurance can be handy.
However, you will have to pay for excess insurance on top of your main car insurance, which will add to the overall expense and eat into any savings you made by choosing a higher voluntary excess.
Excess insurance can cost from around £20 a year, with a higher cap attracting a more expensive premium, and depending on if you buy a single policy or lifestyle excess insurance.
What is not covered by excess insurance?
Not everything is covered so always read the small print of your excess insurance policy to check exactly what you will be covered for.
Some insurers place a waiting period before you can claim on your excess insurance – for example you may not be able to claim within 14 to 30 days of your excess insurance policy starting. You should also check if you will be covered for an accident in another country,
If it's your name on the excess insurance policy, be aware that many providers will only offer excess cover for insurance policies also held in your name. This means if other insurance policies are held in your partner's name, your excess insurance provider may not pay out.
Compare car insurance at MoneySuperMarket
Comparing car insurance quotes on MoneySuperMarket is the best way to browse deals from multiple providers.
All you need to do is enter a few details about yourself, your car and driving history, and you’ll be able to see car insurance deals tailored for you and your vehicle. Once you’ve found the best quote for you, click on the deal and you’ll go straight to the provider’s website.
At MoneySuperMarket, we pre-select a voluntary excess of £250, but on the results page where your quotes are displayed you can change this to an amount between £0 and £1,000 to see the effect it has on your premium.
