What does ‘excess’ mean in car insurance?

Car insurance can be confusing, especially when it comes to understanding excess and how it can impact a claim.

Excess is the amount you pay towards repairs and replacements before your provider pays the remainder.

It can influence your premium, the type of policy you choose, and whether making a claim is worth it.

What is car insurance excess?

All car insurance providers require you to contribute towards the cost of any claim you make during your policy year.

This applies regardless of the level of cover you choose whether it is a fully comprehensive insurance policy, or something else.

In every case, you’ll be expected to pay a specified amount towards a claim before your insurer covers the remaining costs, which you will agree before your policy starts.

This contribution is known as an excess.

By agreeing to an excess, you are effectively taking on a share of the insurance risk yourself, as you pay part of the initial cost of any claim rather than relying entirely on your insurer.

The portion set by the provider is called the compulsory excess and must be paid whenever you make a claim.

In addition, many insurers allow you to opt for a higher voluntary excess, meaning you agree to pay more upfront if you need to claim.

Choosing a voluntary excess can sometimes reduce your insurance premium, but it also increases your out-of-pocket costs if an incident occurs.

Because excess levels and premiums can vary widely, it’s sensible to compare quotes from different insurance providers.

Doing so helps ensure you make an informed choice and select a policy that offers the right balance of affordability and protection for your circumstances.

How does car insurance excess work?

When you make a claim on your car insurance, you are usually required to pay an excess, which is made up of two elements – a compulsory excess set by the insurer, and a voluntary excess that you choose yourself.

These two amounts are added together to create your total excess, which is either paid at the point of repair or deducted from any claim payout.

For instance, if your policy includes a compulsory excess of £125 and you have selected a voluntary excess of £200, your total excess would be £325.

This means you would need to contribute £325 towards the cost of the claim, with your insurer covering the remaining balance.

It’s also important to remember that if the cost of the damage is lower than your total excess, making a claim won’t be worthwhile.

Using the same example, if repairs cost £300 and your excess is £325, your insurer wouldn’t pay anything, as the repair cost doesn’t exceed the amount you’ve agreed to contribute.

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What does ‘total excess’ mean?

Total excess is the overall amount you’re required to contribute towards any claim you make during the life of your policy.

It is calculated by adding together the compulsory excess, set by the insurer, and any voluntary excess you choose.

The exact total will differ depending on the insurer and the specific policy terms.

It is important to be aware that lowering your voluntary excess will usually result in a higher insurance premium, as your insurer is taking on more of the risk.

What does ‘compulsory excess’ mean?

Compulsory excess is the fixed sum you must pay if you make a claim on your car insurance.

As the term implies, this amount is non‑negotiable and is set by the insurer.

The level of compulsory excess can vary between drivers and policies, as it’s influenced by several factors, including the type and value of your car, where it’s kept when not in use, your age, and your driving experience.

Younger or less experienced drivers typically face a higher compulsory excess because insurers consider them to pose a greater risk on the road.

If you make a fault claim, meaning your insurer can’t recover the cost of the claim from a third party, you’ll need to pay your excess and won’t be able to reclaim it.

For a non‑fault claim, where the other driver’s insurer covers the full cost of the incident, you will usually still have to pay your excess upfront, along with any other associated expenses.

However, these costs can normally be claimed back once the insurers have settled the claim.

In many cases, if your provider manages the entire claims process on your behalf, they may be able to recover the excess for you automatically.

It is always a good idea to check this with them while the claim is being handled.

This is because where you are found to be responsible for the accident, your total excess is generally not refundable, as it contributes towards the overall cost of the claim.

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What does ‘voluntary excess’ mean?

Voluntary excess is the amount you choose to contribute if you need to make a claim on your car insurance.

Unlike compulsory excess, this figure is set by you, allowing some flexibility based on what you feel able to afford.

When taking out a policy, increasing your voluntary excess will often reduce your overall premium, as you’re agreeing to take on a greater share of the risk.

However, it’s essential not to set this amount too high. If you do need to make a claim, you’ll be required to pay both the voluntary and compulsory excesses before your insurer processes it.

For that reason, your chosen voluntary excess should reflect your financial situation and be an amount you could comfortably pay at short notice.

When deciding how much voluntary excess to select, it’s also worth thinking about smaller, more common claims.