A guide to car insurance excess

Excess is the amount you pay towards car insurance claims. All car insurance policies come with excess amounts listed. They can be compulsory and voluntary.

What is compulsory excess in car insurance?

Compulsory excess is the minimum amount you have to pay when you make a claim. It’s set by the insurer and is non-negotiable.

Let’s say your compulsory excess was £200. If you made a claim for £1,000 of repairs, you’d have to pay the first £200 and the insurance company would pay the remaining £800.

What is voluntary excess in car insurance?

In addition to compulsory excess, you can opt to pay an additional amount in the event of a claim. This is called voluntary excess and you choose the amount you’ll pay. Insurance premiums can reduce if you opt for a higher voluntary excess as the insurer isn’t liable to pay so much if you claim.

If you had £200 compulsory excess and chose an additional £200 voluntary excess, your total excess amount would be £400. If your claim was for £1000, you’d pay the first £400 and the insurer would pay the remaining £600.

How much voluntary excess should you pay?

It can be tempting to choose a higher voluntary excess as this could bring down the cost of your premiums. Set your voluntary excess amount at a level you’re comfortable you could afford to pay if something unexpected happened and you needed to make a claim.

How do insurers set the amount?

Your compulsory excess is based on your:

• Age
• Driving experience
• Car
• Insurance history
• Any convictions

Young drivers under the age of 21 usually have a higher compulsory excess.

When do you pay it?

The excess isn’t a payment you make to the insurer. If your claim is for repairs at an approved garage, you’ll usually pay the garage the excess amount directly and the insurer will take care of the rest.

If your car is beyond repair, the excess amount will be deducted from the settlement figure paid by the insurer.

Excess insurance for car hire

If you hire a car when you’re abroad, you can be expected to pay a really high excess in the event of a claim which can sometimes be over £1,000.

To mitigate this, you can buy an insurance policy that covers the excess cost. It’s best to find your own policy rather than buying one through the hire company though as these can be a lot more expensive. You’ll still need a separate car insurance policy to cover your driving, this type of product only covers the excess amount.

If you need to claim on the excess insurance for car hire policy, you’ll usually have to pay the excess amount up front and then claim it back from the insurer.

Car insurance excess in a nutshell

Compulsory excess is non-negotiable but you choose how much voluntary excess you’ll pay. You may find your premiums reduce if you opt for a higher voluntary excess but you’ll need to be comfortable it’s an amount you could afford if you made a claim.

Read Smart Money People car insurance reviews as part of your research to see how customers feel about providers before you make a decision. When you’ve chosen a policy, check the conditions carefully to make sure you have the cover and excess amount you expected.

If you’ve already bought a car insurance policy, help other people just like you to make a smart financial decision by writing your own review.