An excess is the amount of money you pay towards any insurance claim you make for damage to your vehicle. There are two excess types:
Compulsory Excess
This is automatically set by the insurer and cannot be changed or negotiated.
Voluntary Excess
This is an amount you voluntarily agree to pay in addition to the compulsory excess amount.
Choosing voluntary excess
When you complete a car insurance quote you will be asked to select a level of voluntary excess. The levels available may differ between insurers but they will generally range from zero up to £1,000 in steps of £100, £200 or more.
The voluntary excess amount will be in addition to any compulsory excess amount that the insurer automatically includes as a standard part of the policy.
Example:
- You’re in an accident and make a claim in order to get your car repaired.
- The insurance company say it will cost £1,500 to repair your car.
- The compulsory excess on your policy is £200 and the voluntary excess you chose when you took out the policy is £500, making a total excess amount of £700.
- This means that you will have to pay £700 towards the cost of repairing your vehicle and the remaining £800 (£1,500 - £700) will be paid by your insurer.
Will I have to pay excess if the claim was not my fault?
It depends if the third-party admits full liability. If the third-party insurer agrees that it was 100% the fault of their client, then your insurance company will try and recover all costs from them and your excess will be waived, but this may depend on the specific insurance company. If liability cannot be determined, then you will either have to pay the full excess amount or your insurer may negotiate a 50:50 split with the third party.
Will I have to pay excess if the third party makes a claim against me?
No, you do not have to pay any compulsory or voluntary excess amount for third party claims made against you. So, for example, if you hit another car then and they claim against your insurance, you will not have to pay excess for their claim costs. You only pay excess for damage to your own vehicle.
How much is compulsory excess?
This amount is set by the insurance underwriter and is based on your risk profile such as how old you are, how long you’ve held your licence and the type of car you’re driving. A young driver or someone driving a high insurance group rated car may have their compulsory excess set much higher. In general, the compulsory excess amount is often around £250 give or take.
Can I change the compulsory excess amount?
You cannot alter the compulsory excess as it forms part of the standard policy terms as set by the insurance company. However, if your risk profile changes for the better, such as having a much lower group car, then it’s possible that the underwriting system will automatically adjust the compulsory excess lower. Conversely, if your risk profile becomes worse such as multiple claims, convictions or your car is higher rated, then this may be reflected in a higher compulsory excess amount.
Will a higher voluntary excess make my insurance cheaper?
Yes, choosing a higher excess amount will usually make your quote cheaper. The amount it discounts your price will depend on the specific insurer. You can ‘play’ around with changing the voluntary excess amount on the quote to see by how much each level of excess reduces the price of your quote.
Why does a higher voluntary excess make my insurance cheaper?
The reason is because you have essentially agreed to pay more towards any potential future claim that you make. If you choose to have no voluntary excess at all then your insurance quote will likely be higher, as your insurer would be liable to pay the full claim amount (less any compulsory excess). The more voluntary excess you choose, the less the insurer will be paying out in any claim you make and the less your quote will be.
How much voluntary excess should I choose?
You should always find a balance that you are comfortable with. Many people are tempted to go for the maximum voluntary excess amount available because it makes their insurance quote that much cheaper. However, you always have to bear in mind that whatever level you choose, this will be the amount (plus the compulsory excess amount) that you will be required to pay towards any claim you make.
So, for example, if you choose £1,000 voluntary excess it will likely make your quote significantly cheaper, however, you will then be required to pay the first £1,000 plus any compulsory excess towards any claim you make. If the compulsory excess is £250 then, in this example, the total excess you will have to pay is £1,250 towards any claim.
When deciding, always remember that you have a compulsory excess to pay as well. So, take this into account when choosing your voluntary excess. Make a note of exactly how much your car insurance price is being reduced by when choosing a higher excess, you may think it’s not worth going for a higher amount.
If, for example, you are comfortable with a total excess amount of £500, meaning that you will pay the first £500 of any claim you make, then choose a voluntary excess that makes up the difference between the compulsory excess and £500. So, if the compulsory excess is £200, choose a voluntary excess of £300 for a total excess amount of £500.
Can I change my voluntary excess amount after I buy the policy?
It depends on the insurer. Some companies will not allow you to change it at all and others allow you to change it at renewal time only. You will certainly not be allowed to change it if you make a claim.
