Car insurance excess
All car insurance policies come with an excess, but what exactly is it and when is it payable?
It’s important to understand car insurance excess when you’re buying insurance, but it can all get a bit confusing. Not to worry, we’re going to run through the most commonly asked questions about car insurance excess.
What is excess in car insurance?
Car insurance excess is the amount you’d have to pay towards a claim you make on your insurance policy, or the amount that’s held back by your insurance company. The total is usually made up of voluntary excess and compulsory excess (we’ll go into more detail about what that means later).
How does car insurance excess work?
Let’s say your policy excess is £500. If you’re involved in an accident and you make a claim costing £1,000, you will pay the first £500 and your insurer will pay the remaining £500.
If the cost of repairs is less than your excess, you won’t be able to make a claim. For example, if you have a cracked wing mirror, replacement glass can cost less than £20. You won’t be able to claim off your insurance policy… but at least it’s not going to break the bank.
What is compulsory excess?
The clue is in the name… compulsory excess is a fixed amount set by your insurer that you have to pay. This is based on the different ‘risk factors’ on your insurance policy, such as age and experience. So bad news for young drivers, the compulsory excess is nearly always higher for you guys, compared with an older more experienced driver. Some drivers will have no compulsory excess at all.
What is voluntary excess?
The voluntary excess is any amount you choose to pay on top of your compulsory excess. The voluntary excess you choose can affect your premium. Generally, if you choose to increase your excess, you will have a lower premium. In the same way, if you choose a lower excess your premium is usually higher.
Do you have to pay compulsory and voluntary excess?
Nearly all annual car insurance policies have a compulsory and voluntary excess. You can choose how much voluntary excess you want to pay, within a set range. It’s slightly different with temporary car insurance because you only pay compulsory excess.
Should I pay a high voluntary excess?
This depends on whether you want to pay less for your insurance and whether you’re able to afford to pay a higher excess if there is a claim. Although a lower insurance cost is attractive, you should bear in mind that if you do need to make a claim, you could end up paying more overall.
If you can’t afford the excess, your insurer could refuse your claim, or deduct the amount from what they pay towards the repairs. We’d suggest you only increase your voluntary excess if you could afford to pay the extra cost if you got into an accident.
How much is car insurance excess usually?
Insurance companies usually have ‘variable excess’ which means it will be higher for some people and lower for others. A range of factors will be used to decide your excess, such as:
- Your car (it’s age, make and model)
- Your age
- How long you’ve been driving for
- The type of policy you’re looking to take out
Why do insurers charge car insurance excess?
An excess is there to deter drivers from making multiple claims for minimal damage e.g. a cracked wing mirror or a small dent. The idea is that drivers take responsibility for minor damage and insurance is there for the big claims that you wouldn’t be able to pay for yourself. By including an excess to cover small claims, insurers can charge a lower premium and make insurance more affordable for everyone.
If all this car insurance lingo is giving you a headache, we’ve got an article that may be useful for you, check out our car insurance jargon buster.
When do you pay excess on car insurance?
In most cases, you’ll only end up paying the excess for damages when it’s your fault. However, initially you’ll pay the excess whenever you make any claim on your insurance policy, regardless of who’s to blame. Then, if it’s proven the accident was the other person’s fault, your insurer will try to recover the full cost from the at-fault party’s insurance. In that case, the excess you have paid is refunded so you’re not left out of pocket!
How does the excess work on temporary car insurance?
The excess on temporary car insurance works slightly differently to traditional annual policies. Basically, there is no voluntary excess, only compulsory.
The accidental damage excess on most temporary cover policies is set at £750 and some customers can choose a lower excess of £250, depending on the policy details.
If you didn’t know, with our temp insurance you can get cover on your own car or borrow someone else’s from 1 hour to 60 days.