Understanding excess in car insurance

When you’re looking for quotes on your car insurance, the term ‘excess’ will come up a lot but you may be wondering: what is excess in insurance? This blog will answer that and other commonly asked questions about excess.

What is excess in insurance?


When you purchase insurance, you agree to an excess on your policy. This excess is apart of an insurance claim to be paid by the insured.


In the unfortunate event that you need to make a claim, the excess is the amount you agree to pay towards the claim.


How does this work in practice?


For example, if you have an accident which is your fault for which the repair costs are £2,000 and your total excess is £500, you will need to pay £500 towards the cost of your repairs, and your insurer would pay the remaining £1,500.


However, if the total cost of the repairs was less than £500, you wouldn’t be able to claim and would need to pay for the repairs yourself.This is because the total value of the claim must be greater than the total excess.


You only need to pay an excess if you are at-fault for the incident. If the incident was not your fault, then you do not need to pay any excess, because this will be covered by the party at fault, who would need to claim on their insurance policy.


You should also remember that most insurance policies will have a limit – this means that the insurer will only pay up to a certain amount for a claim. If your claim is higher than this, you would have to cover the rest.


Excess is often made up of two parts: compulsory excess and voluntary excess.

Minor car collision

What is compulsory excess?

Compulsory excess is set by the insurer and you’re not able to change this. This amount is determined by factors including your age, driving experience, and the type of car you drive.


Younger drivers often have a higher compulsory excess due to their statistically higher risk of accidents.

What is Voluntary Excess?


Voluntary excess is controlled by you. It is an extra amount, on top of the compulsory excess, that you’re willing to pay in the event of a claim.


Opting for a higher voluntary excess can often reduce your premium, as you’re taking on more of the risk yourself.

Does raising voluntary excess make your car insurance cheaper?


If you choose a higher voluntary excess, it can reduce the premium as you’ll be paying more of any potential repairs.


However, it's crucial to ensure that you can afford to pay the total excess (voluntary plus compulsory) if you need to make a claim – it might not be worth a reduced premium when you’re unable to afford repairs in the event of an accident!


What is excess insurance?


Excess insurance, or excess protection insurance, is an additional policy that covers the cost of your excess in the case of a claim. This means if you must pay your excess after an accident, your excess insurance policy will reimburse you.

It's an extra safety net for those who want to lower their premium by choosing a high voluntary excess but don’t want the risk of large out-of-pocket expenses when making a claim.



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