A guide to car insurance excess

With the different types of insurance policies and different excesses to consider, motor insurance can be complicated, but is necessary if you want to drive a vehicle. This guide will help you understand how excess works and what effect it can have on your premiums. 


What is car insurance excess?

All car insurance providers insist you pay towards any claim you make within your policy year. Whether you’re looking for Third Party Fire and Theft or Comprehensive motor insurance, you will still need to pay a certain amount of excess if you were to make a claim. An excess means that you, the policyholder, agree to take part of the ‘insurance risk’ away from your insurer, as you are agreeing to pay a portion of the initial costs of any claims.

This amount is known as compulsory excess. You can also choose to pay more money, known as a voluntary excess, which may lower your premium.

It’s worth your while to compare quotes from insurance providers so you can make an informed decision and find the right policy for your needs. If you’re still unsure what car insurance excess is, the explanation below will offer further guidance. 

What does “total excess” mean on car insurance?

Total excess is the combined amount of “compulsory” excess and “voluntary” excess that you’ll need to pay towards any claim you make during your active policy period. This amount will vary depending on the policy and your provider. If you’re finding that the total excess for car insurance is high and beyond what you can afford in an unforeseen situation, you may want to look at the voluntary excess and lower it to a level you are comfortable with. Please note, that this may increase your overall premium.  

What is “compulsory excess” on car insurance?

Compulsory excess is the fixed amount you’ll need to pay when you make a claim on your car insurance. As the name suggests, this is a mandatory amount set by insurance providers. The amount differs from driver to driver and will depend on a variety of factors, such as the make and model of car you drive, where it’s stored when it’s not on the road, your age and how long you’ve been driving for. You’ll find that young or new drivers will have a higher compulsory excess than a road user with more experience due to the higher risk they pose on the road. 

If you make a “fault” claim (meaning your insurer were unable to recover the costs of your claim), you’ll have to pay your excess and will not be able to claim this money back. If you make a “non-fault” claim (meaning the other party’s insurer has paid your insurer in full for the costs incurred), you will still need to pay your excess and any other related costs, but you will be able to claim these back. 

If your insurance company have dealt with the claim, they are usually able to claim the excess back for you, but it’s best to clarify with them during the claims process. In the event of a claim or accident where you are deemed to be at fault, your total excess isn’t generally refundable to you as you will be paying towards the total costs of the claim. 

What is “voluntary excess” on car insurance?

Voluntary excess is the amount of money you’re willing to pay when you want to make a claim on your car insurance. It works using a slightly different method to compulsory excess, as you set the amount you can afford. When applying for car insurance, you’ll find that if you increase the amount of voluntary excess you’re willing to pay, the overall premium may go down. 

It’s important that you don’t increase the voluntary excess to something you cannot afford. In the event of having to make a claim, you should remember that you’ll need to pay both the voluntary and compulsory excess in order for your insurer to deal with your claim; so it’s important to agree to a voluntary amount that is affordable for you and your circumstances.

Not only this, when considering how much voluntary excess you could pay on car insurance, it’s a good idea to estimate the minimum repair cost that you might claim for in the eventuality of a minor accident such as a damaged wing mirror. Keep in mind that the voluntary excess should not be more than the cost of the most basic claims. This is because you may end up paying a price that’s more expensive than the actual cost of repair if you choose to claim through your Insurance policy. 

For example, your policy has a voluntary excess of £150 and a compulsory excess of £100. You make a claim for a cracked bumper. You then find out that the bumper will cost just £160 to repair. In this scenario, you’ll still have to pay the voluntary excess plus the compulsory excess, which is more expensive than the actual cost of the repair. 

Whether or not you’ll be able to claim back your voluntary excess from your insurance company will depend on whether or not the accident was your fault. 

How much excess should I pay for car insurance?

Accidents are unwanted surprises that unfortunately do happen, so it is important to be prepared by having the right amount of car insurance in place. However, you should, in all circumstances, only agree to as much total excess as you will be able to afford. Do remember that you’ll only need to pay the total amount of excess stated on your policy at the point of a claim.  

How can I reduce my insurance costs? 

One of the best ways you can reduce your premium for car insurance is to research other insurers’ policies. This will help you clearly compare different providers to get the best deal for you. It’s worth keeping in mind that the cheapest premium isn’t necessarily the best one for your needs, and may not provide the cover you’d require in the event of an accident or claim. 

You may also want to consider where you park your car when it’s not on the road – see our article on overnight parking. If you store your car in a locked garage overnight rather than on the side of a road, it may reduce your overall premium. This can be the same for increasing the security in your vehicle by fitting an approved alarm system or immobiliser. 

If you’re a new or young driver you may benefit from black box insurance. This uses telematics to assess your driving behaviour and rewards you for safe driving by lowering your premium over time. Find out more about our RAC Black Box Car Insurance here

At RAC we offer competitive vehicle insurance policies for Third Party Fire & Theft and Comprehensive levels of cover. Our RAC Car Insurance Plus Policy cover is 5 star Defaqto rated. Get a quote here today and find out how much you can save. 

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Frequently Asked Questions

Is it better to have a high or low excess?

If you have a low excess on your insurance, it means you’ll have to pay less when you make a claim – the excess is an amount of money you have to pay yourself. So if your excess is £300 and you claim for damage that costs £1,000, then you’ll have to pay the first £300 and the insurer will pay the rest. Some insurance policies may offer a lower price in exchange for a higher voluntary excess. So: if you don’t have to claim, you could save money with a higher excess, but if you do, you’ll have to spend more.

Do I pay excess if it is not my fault?

Even if you’re not at fault in an accident, you’ll have to pay the excess if you claim on your insurance. But if you can prove it wasn’t your fault, you might be able to claim that excess back.

Should I pay more voluntary excess on car insurance?

With a higher voluntary excess, you’ll probably get a lower price for your car insurance. But if you need to make a claim, you’ll have to pay more towards the cost. So it depends how likely you think it is that you’ll have to claim on your insurance.