Car insurance excess: All you need to know

If you’ve ever searched for car insurance, you’ve no doubt come across the term ‘excess’ before. 

Not sure what it means? Or have questions about how it works? You’re not alone. Research by Go.Compare last year found that over 47% of people don’t fully understand compulsory and voluntary excess. 

But buying an insurance policy without fully understanding excess can lead to expensive shocks when you need to make a claim. That’s why we’ve put together this guide.

What is car insurance excess?

When you take out any kind of insurance policy – including a car insurance policy – there’s almost always an excess. This is a pre-agreed amount that you’ll need to pay if you make a claim. 

Your excess is divided into two parts: 

• Your compulsory excess is the amount your insurance provider decides you must to pay
• Your voluntary excess is the amount you agree to pay on top of your compulsory excess 

So let’s say your compulsory excess is £250. You then agree to a £150 voluntary excess. If you have to make a claim, you’ll pay £400. This is known as your total excess. 

Compulsory excess

Like we said, your compulsory excess is the amount your insurance provider says you must pay in the event of a claim. You can’t negotiate this amount.

When deciding your compulsory excess, your insurance provider will take into account several factors. For instance, what type of car you drive, where you live and how experienced you are on the road.

If you’re a new or young driver, you might find that your compulsory excess is high. This is because, statistically, you’re more likely to have an accident and make a claim than a more experienced driver. 

Typically, your excess will also be high if:

• You drive a car which is expensive to replace or repair 
• You live in an area with more crime or accidents
• You’ve got penalty points on your licence 

Voluntary excess

Your voluntary excess is how much you agree to pay on top of your compulsory excess if you make a claim. 

You might wonder why anyone would voluntarily pay more money than they have to towards a claim. The answer is simple: agreeing to a higher excess almost always means you’ll pay less for your insurance. 

Most insurers will allow you to set your voluntary excess at up to £1,000. 

But remember: you don’t choose when accidents happen. So it’s important you only agree to a voluntary excess that you can comfortably afford to pay in the event of a claim. 

Because if you have an accident and you can’t afford to pay all of your excess upfront, it’s unlikely that your insurance provider will accept your claim. And then you’ll have to fork out for any damages from your own pocket, which could cost thousands. 

Why do insurers charge an excess?

Essentially, insurance providers charge an excess to protect themselves from fraud. Because if someone has to pay to make a claim, that claim is more likely to be genuine. 

It also reduces the number of low-value claims insurers get. Because many find it cheaper to pay to fix very minor damage to their car themselves than pay their total excess and claim through their insurance. 

This is good news for the majority of drivers. If insurance providers waste less money on false and low-value claims, they’re less likely to bump up insurance prices. 

When will I need to pay my insurance excess?

Whenever you make a claim on your car insurance, you’ll need to pay your total excess (that’s your voluntary and compulsory excess combined). Usually, your insurance provider can’t look into your claim until you’ve paid it.

If an accident wasn’t your fault

You’ll need to pay your excess even when you claim for an accident that wasn’t your fault. 

But usually, you’ll get this money back once your insurance provider has:

• Confirmed that you weren’t at fault 
• Recovered all losses (including your excess) from the insurer of the driver responsible

If you’re hit by an uninsured driver

Here at Prima, we don’t like seeing our drivers pay for someone else’s mistakes. 

So if you’re hit by an uninsured driver, you might be asked to pay your excess initially. But we’ll pay you back this money as soon as we’ve established all the details of the accident. 

This isn’t the case for all insurance providers though. So if you decide to buy insurance elsewhere, make sure you check their policy on uninsured drivers. 

How can I check how much excess I need to pay?

When you get a car insurance quote, it should clearly say how much excess you’ll need to pay if you make a claim. At this point, you can often edit your voluntary excess amount to see how it affects your premium. 

Once you’ve purchased car insurance, you can check your excess at any time by referring back to your policy documents. 

Where can I get a quote?

If you want to explore car insurance prices – and see how your excess could affect your premium – we recommend visiting one of our partner price comparison websites. See Compare the Market, Confused.com or Go.Compare.