What is excess in car insurance?

24th January 2019by Joanna White

Car insurance is an unavoidable cost when it comes to driving a car. While it might not be cheap, it is still incredibly important to have if you want to make sure you’re protected against any costs incurred when you experience an accident or incident on the road.

Car insurance excess is one of the factors contributing to the amount that you pay for your monthly or annual premiums. It can either be laid out as compulsory excess by your insurance provider or can be negotiated between yourself and your insurer.

In short, car insurance excess is the total amount of money you must pay towards any claims that you make. This guide explains in detail what is excess in car insurance and what you can expect from it.

What you need to know – what is excess in car insurance?

As stated above, excess with regards to car insurance is the fixed amount that you’re required to pay if you need to make a claim.

The excess cost will differ between each insurance provider and is often an amount that’s agreed upon by yourself and your insurance provider. Different car insurance companies offer different excess which often depend on the annual premiums paid. M&S Car Insurance and Admiral Car Insurance are two alternative insurance companies to compare the price of your premiums and excess for your preferred policy.

If you make a claim for something that wasn’t your fault however, then your insurer may just decide to waiver your excess and pay your claim in full. Again, these types of policies will differ between each provider.

Compulsory excess

Compulsory excess is exactly what it says in the name; it’s the amount you must pay no matter what as set out by your car insurance provider.

This type of excess is often much higher for young and inexperienced drivers as insurers deem these people to be more at risk of making a claim, therefore they want to avoid having to pay out great sums of money as much as possible.

Voluntary excess

Voluntary excess on the other hand, is the amount of money that you’re personally willing to pay; you will agree the sum with your insurance provider based on what you’re able to pay, should you need to make a claim. Learn more about voluntary excess.

Oftentimes, there is a minimum amount that the insurer will require you to pay, but other than that, you will be able to set the amount according to what you’re able to pay.

Higher excess = lower insurance premiums

When it comes to how much you’re willing to pay for your voluntary excess, it’s all based upon how likely you are to make a claim.

Of course, no one can predict when you might need to place a claim with your car insurance, but you can determine the risk you’re willing to take and how much you’re willing to pay for it.

One way of keeping the cost of your car insurance premium down is by increasing your voluntary excess; the amount you must pay towards your claim.

While increasing your voluntary excess may keep your premium costs down, it also means that you’ll be faced with a larger sum that you must pay towards your claim. If you consider yourself to be a careful driver, who’s never made a claim on their insurance, then it may be a good idea to increase your voluntary excess.

However, as previously mentioned, no one can predict when they might need to make a claim; therefore, it’s simply down to whether you’re willing to take that risk.

Another thing to note is that even if you don’t want to increase your voluntary excess, you will still be required to pay a minimum compulsory excess as set out by your insurance provider.

In some cases where you think you want to make a claim against small accidents, the cost of your excess may be more than the cost of repairing your car; therefore, it wouldn’t be worth it to make a claim on your insurance policy.

Conclusion – what is excess in car insurance?

Excess in terms of car insurance is a fairly simple process to understand; it’s the amount you must contribute towards the cost of making a claim on your insurance.

Many people are happy to stick with the compulsory excess amount laid out by their insurance provider, but others may wish to increase voluntary excess if they’re confident in their driving abilities.

Excess in car insurance is all based upon risk factor; both the risk that the insurer is willing to take when offering you the compulsory excess, as well as the risk you’re willing to take when deciding whether to pay more voluntary excess.