What is excess in car insurance?
Your policy has a voluntary and compulsory excess. But what does that mean?
Insurance excess is the amount you must pay towards the overall cost of an insurance claim. It’s not exclusive to car insurance. It’s also applied on other types of insurance policies including travel, home, pet and health.
Worryingly, our research shows that less than half (47%) of people say they fully understand what an insurance excess is. That figure dropped to just 18% for those aged between 18-34 and 12% admitted they didn’t realise they’d have to pay an excess as part of a claim.
As with any financial product, it’s important to understand how your car insurance works, including what it covers and what happens if you need to make a claim. This will increase the chance of any claims you raise being accepted and will help you avoid unexpected bills.
What is excess in car insurance?
There are two types of excess - compulsory and voluntary.
Compulsory excess is set by the insurer and can’t be changed, while voluntary excess is an amount chosen by the policyholder.
If you make a claim, the voluntary and compulsory excesses are added together – known as the total excess - and must be paid upfront or deducted from any settlement in the event of a claim.
As an example, if your compulsory excess is £150 and you choose a voluntary excess of £100, your total excess is £250. You’ll need to pay a total of £250 towards the cost of a claim.
In addition, if you need to make a claim on an insurance policy, the value of that claim must exceed the total excess. So, if the voluntary excess and compulsory excess are both £250, the total excess is then £500. But if the value of repairs was less than the £500, you wouldn’t be able to claim.
- Voluntary excess is an amount chosen by the policyholder
- Compulsory excess is set out by the insurer and can’t be changed
- If you make a claim, you pay both the voluntary and compulsory excess amounts
- Choosing to pay a higher voluntary excess can make your insurance premiums cheaper, but it must be affordable
How does excess work?
Compulsory excess is calculated by the insurance company according to a range of factors including your age, the type of claim you're making, the age of your car and the number of years you have held a driving licence.
On the other hand, voluntary excess is an amount chosen by you, the policyholder, based on your financial circumstances.
Does raising your excess make your car insurance cheaper?
Choosing to pay a higher voluntary excess can make your insurance premiums cheaper, as you’ll be footing more of the bill yourself.
Things to consider before raising your excess:
- Make sure you choose an excess that’s within budget. Raising it beyond your affordability for the sake of potentially cheaper insurance will be a false economy if you need to make a claim
- Increasing your excess is only really worth doing if you can afford to pay it.
- Because your insurer won’t usually pay out for a claim that costs less than your total excess, it’s wise not to push your voluntary excess too high. The point of an insurance policy is that you can claim on it.
- If your compulsory excess is high, you might want to keep your voluntary excess as low as possible.
When do you pay excess on car insurance?
Insurers all work differently. You could be asked to pay upfront as soon as you start the claims process, or the bill might land when the claim is being paid.
Can you change the excess on your policy after you’ve bought it?
You can't change the compulsory amount of excess on your policy as this figure is set by your insurer after analysing risk factors that make accidents more or less likely.
Your voluntary excess, however, can be changed or removed when you first take out your policy or when you renew it.
When might you pay a different or additional excess?
High excess policies
If you have driving convictions or you’re a young and inexperienced driver getting affordable insurance can prove difficult. It's possible to opt for a higher excess to lower your premium.
However, you'll need to review all of your options carefully, as in these circumstances a higher excess could be thousands of pounds.
Drivers under the age of 21 usually have a higher compulsory excess as they’re seen as more likely to be involved in an accident.
According to Defaqto, 43% of policies charged drivers under 21 an additional accidental damage excess ranging from £300 to £499.
If an unapproved garage or mechanic repairs your car, your insurer might ask you to pay an additional excess. It’s your legal right to choose where your vehicle is repaired, but it could cost you if it’s not an approved garage.
Fire and theft claims
If you drive a luxury or high-performance car you can expect to pay a higher excess because they’re more desirable to thieves and are typically much more expensive to repair. A car capable of higher speeds is also at greater risk of being involved in an accident.
The excess on a windscreen repair is separate from the standard excess you’ll pay on a claim. 91% of policies listed on Defaqto charged an excess for windscreen replacement and it was between £60 and £99 on just under half of them.
The driver-specific excess can apply to policies where there are multiple drivers listed. Certain drivers may be expected to pay a larger excess if they make a fault claim.
When won’t you pay an excess?
If the accident wasn’t your fault
You pay an excess when it’s your fault and you make a claim on your insurance.
If you've been involved in a road traffic accident that wasn't your fault, you shouldn't have to pay the excess. The party who is at fault will need to make a claim on their own insurance policy to cover the cost of any damage.
If your excess has been waived
You pay the excess in the event of any claim made on your insurance policy regardless of who is to blame.
However, if it's proved the accident was the other person's fault and the full cost is recovered from their insurer, you may be able to recover this amount.
Third party claims
An excess is the amount you pay towards your own repairs or claim, so you don't have to pay an excess for a third party's claim.
Do you pay if the other driver isn't insured?
If the other driver is unknown or is found to be uninsured, you may end up having to pay the excess regardless of who was at fault.
Excess protection insurance
Excess insurance can be a separate policy to your car insurance or added as an optional extra. It could cover the cost of your excess if you have to make a claim. You would still need to pay the excess initially in the event of a claim, but you can then get it back from your excess insurance policy.
Currently, drivers shopping around for car insurance with Go.Compare can benefit from its free £250 excess cover if purchasing a car insurance policy.
Your free cover will refund up to £250 of the excess you have to pay. Let's say your total excess is £300. You pay this to your insurer, then we refund up to £250 after your claim's settled.
Find out more about Go.Compare's free excess cover
Frequently asked questions
Excesses help to deter fraud and false claims, as having to pay an excess means anyone making a claim is more likely to be genuine. It’s also a way to reduce the number of very low-value claims, which will help keep the overall cost of insurance down.
This isn’t routinely offered as an option – but you can ask and explain your financial circumstances. Your insurer might give you longer to pay or agree to receive it in instalments.
Insurers usually ask you to pay the excess at the outset when starting a claim. The investigation process to review what happened and who was at fault follows. Alternatively, the excess could also be deducted from the total repair bill, so you might pay it at the end of the claims process.
If you don’t have the funds to pay the excess your insurer may refuse your claim or it might deduct the amount from what it pays towards the repairs, leaving you with a bill directly from the garage. Check the policy to find out how this would be handled.
Excess protection insurance could cover the cost of your excess, up to a limit you choose, when you buy the policy. You pay your excess first, and when your claim is settled, your excess cover policy refunds you.
You can buy it as a standalone policy or as a paid-for extra from some insurers.
Even though you’ll get some, or all, of your excess back, you might still lose your no-claims bonus and your car insurance premiums will probably go up when you renew.
There’s no average length of time. How quickly you get your excess refunded depends on how quickly the review is resolved.
You need to wait until your car insurance claim has been settled before you can claim on your excess protection insurance.
Making a claim is almost always going to result in an increase in your car insurance premium, especially if the accident is deemed to be your fault.