Car insurance excess: Explained

When buying car insurance, one of the important things to to check for and understand is the excess. It's important because it affects how much you'd be able to claim and how much you'd have to cover out of your own pocket. Excess also impacts on how much you pay for your insurance.

Find out in this blog what excess means for your car insurance and how it works.

Car insurance excess – What does it mean?

What is excess in car insurance, exactly? When you make a claim on your insurance, if your claim's successful you'll often need to cover some of the cost yourself, and your insurance provider will take care of the rest. Basically this means you won't be able to claim the total cost from your insurance provider.

For example, you might have to pay £200 excess, then your insurance provider would cover the rest of the cost after this point. If your damages totalled £1,500, you'd be able to claim £1,300, and you'd cover £200. Your insurance provider would need a report from an independent source, like a mechanic or a qualified assessor, before deciding on the value of the claim.

The £200 mentioned above is just an example. Your insurance excess could be higher or lower than this, depending on the specifics of your policy details. If your excess is high, it might not always be worth claiming on your insurance for superficial damage like scratches to your paintwork.

Compulsory and voluntary excess on your car insurance

So, what is voluntary excess on car insurance? It's an increased amount of excess you've chosen to pay when making a claim on your car insurance policy. This is the difference between voluntary and compulsory excess on your car insurance — you have to pay compulsory excess, but you choose to pay voluntary. Depending on your policy you might also have a compulsory excess as well as voluntary excess.

So why might you choose this? It all comes down to finances. Insurance providers often offer reduced premiums for higher excesses chosen. Because the more excess you pay, the lower the risk level you represent to the insurance provider.

But how much voluntary car insurance excess should you pay? Well, the more excess you pay, the lower your premiums could be, but you probably won't be able to select just any level of excess - you'll likely have to choose from a set of options offered by your insurance provider. The amount of voluntary excess you choose will also depend on your personal circumstances and what best suits your needs.

If the car accident wasn't your fault, do you still pay excess?

If the car accident is not your fault, do you still pay an excess? The answer depends on who's claiming. It'll depend on your insurance policy but in many cases it works like this:

• If you've suffered damages and need to claim on your insurance, you may have to pay the excess.

• If a third party has suffered damages and they're making a claim, you generally won't have to pay an excess.

No matter who's at fault in the accident, the person making a claim will pay the excess.

If someone feels they shouldn't have to pay the excess on an accident that wasn't their fault — or shouldn't have to make a claim — they might take the other party to court to try and win this money back. But this is separate from making an insurance claim.

What is excess protection car insurance?

Excess protection is an additional type of insurance that can help you claim back the money you've spent on excess if you've decided to make a claim. So, if you have had to spend £400 in excess after claims on your insurance, you can put in another claim to get this excess paid back to you (as long as you're within the allowed time period, also called the 'validity period').

Not all insurance providers offer this protection, and if they do you might want to consider the additional premium cost — you'd have to pay a bit more for your policy for adding excess protection cover. The cost would also depend on the amount of excess you pay on your insurance — the greater the excess you've chosen, the higher the extra premium cost.

A few final tips...

• Excess is the amount of the claim you'd need to pay yourself before an insurance provider pays the rest.
• Paying more voluntary excess can keep your premiums low.
• If you have excess protection you might be able to claim your excess payments back, but for an additional cost.

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.