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The excess on a car insurance policy is the amount of money that you, the policyholder, agree to pay up front in the event of a claim.
The excess goes towards your repairs or claim – you don’t have to pay an excess for a third party’s claim.
An excess means the policyholder shares responsibility with the insurer for any claims. This reduces the number of low-value claims and deters fraud, keeping the cost of insurance down for everyone.
Every car insurance policy comes with a compulsory excess – this is set by the insurer and is non-negotiable. Drivers also have the option to add a voluntary excess to their policy, with the aim of being offered a cheaper premium.
If you make a claim, your total excess will be the sum of these two figures.
Drivers must understand how car insurance excesses work, as a lack of awareness could mean facing an unexpectedly big bill in the event of a claim.
This guide explains what voluntary excess is, how it works and how it differs from compulsory excess.
A voluntary excess is a supplementary excess added to a car insurance policy – and it’s up to the policyholder how much the additional figure will be (within certain parameters).
Insurers offer lower premiums to drivers with higher excesses because a larger total excess lowers the chances that the insurer will need to pay out for a car insurance claim. In addition, when a claim is made, it will be cheaper for the insurer to settle than if the driver had a smaller excess.
Here’s an example: say your compulsory excess was £250 and your voluntary excess was £150. Your total excess would be £400. If you made a claim worth £1,000, you’d pay £400 towards costs, and your insurer would pay £600.
But if you increased your voluntary excess to £250, your total excess would be £500. In the event of a £1,000 claim, you’d pay £500, and the insurer would pay the other £500.
When you buy a car insurance policy, you can typically choose the amount of voluntary excess; the higher the figure, the lower your premium should be. Insurers normally offer voluntary excess amounts in £50 increments – for example, your voluntary excess might be £100, £150, £200 or so on.
If you use a price comparison website to compare car insurance, spend a few minutes experimenting with different voluntary figures to see the effect on the quoted premiums.
Opting for a high voluntary excess is a bit of a gamble. If you don’t claim on your policy, you’ll have saved money. But if you need to make a claim, you’ll have to pay a larger sum of money.
The compulsory excess is a fixed amount that will be the maximum you’d pay in the event of a claim. The compulsory excess amount is set by your insurer.
However, that doesn’t mean the compulsory excess is the same on all car insurance policies. It will depend on the following:
In contrast, the voluntary excess is an optional, flexible amount the policyholder has complete control over.
Together, the voluntary and compulsory excesses are known as the total excess.
This is the figure that will be deducted from any settlement in the event of a claim.
A car insurance excess is the maximum amount of money the policyholder must pay when making a car insurance claim.
The following table shows how the total excess impacts claim amounts and settlements.
| Claim amount | Total excess | Amount paid by policyholder | Amount paid by insurer |
|---|---|---|---|
| £200 | £250 | £200 | £0 |
| £300 | £250 | £250 | £50 |
| £400 | £250 | £250 | £150 |
| £500 | £250 | £250 | £250 |
| £600 | £250 | £250 | £350 |
| £200 | £400 | £200 | £0 |
| £300 | £400 | £300 | £0 |
| £400 | £400 | £400 | £0 |
| £500 | £400 | £400 | £100 |
| £600 | £400 | £400 | £200 |
Where the insurer would pay £0, it won’t be worth making a claim. Where the insurer would only pay £50 or £100, you’d need to weigh up whether it’s worth losing your no-claims discount (if you have one) by making a claim.
Even if you don’t intend to make a claim, you’re legally obliged to inform your insurer if you have an accident that causes damage to your vehicle or another vehicle.
The excess will only ever be to cover repairs to your vehicle if you’ve caused an accident. If the accident was the other driver’s fault, you may have to pay your excess initially, but you can then claim it back from the other party’s insurer.
Increasing your total excess can make your car insurance cheaper.
From the insurer’s point of view, a higher excess reduces the:
But a higher excess increases the amount of money you’d potentially have to pay in the event of a claim. So, it’s important to choose an amount you can comfortably afford.
When you compare car insurance, experiment with different voluntary excess amounts to see what impact they have on the premiums quoted. How much money you can save will vary greatly depending on your age, your driving experience, your car and the insurer.
As an example, we generated some insurance quotes for a 10-year-old Peugeot 108 for a driver living in South London.
For a 50-year-old woman who’d been driving since the age of 17, increasing the total excess from £250 to £750 with one particular insurer only knocked £3 off a premium of £244 (bringing it down to £241). With that tiny saving, tripling the total excess arguably wouldn’t be worth it.
The differences in premiums were much more pronounced when we changed the driver to a 23-year-old man with five years’ driving experience and looked at a different insurer. With a total excess of £200, he’d pay a premium of £645; upping the excess to £400 reduced the premium to £600. So this driver would save £45 by doubling his total excess.
Some drivers will only save a few pounds while opening themselves up to a much greater financial liability in the event of a claim. So make sure you compare the figures carefully, as choosing a high voluntary excess might turn out to be a false economy.
All insurers will require you to set a voluntary excess. However, the options will include setting the voluntary excess to zero, so there’s no real obligation to include a voluntary excess.
How much you choose as a voluntary excess will also be influenced by how much the compulsory excess is. Compulsory excesses vary from insurer to insurer and depend on the driver and car being insured.
The important figure to look at when comparing insurance policies and premiums is the total excess.
When you’d have to pay your excess in the event of a claim depends on the insurer – they all work differently.
You might be asked to pay:
If your car cannot be repaired and is written off, you’ll need to agree to a valuation with your insurer. Once you’ve agreed to the valuation, the insurer will take the excess off the value of the car and reimburse you for the balance.
Excess insurance is more common for hire cars than privately owned cars, but it is available to buy. Alternatively, some price comparison websites run promotions where they give you free excess cover if you buy a policy through them.
Excess insurance is usually a separate policy from your car insurance and will cover the cost of your excess if you need to pay it in the event of a claim. You normally pay the excess and then claim the amount back from your excess insurance policy provider.
You’d need to do the sums to work out if excess insurance is worth buying. To do this, look at how much you could save on your premium by increasing your voluntary excess. Then compare this cost saving to the cost of excess insurance.
For example, if increasing your excess from £500 to £700 would save you £100 on your insurance, it would only be worth buying excess cover if it cost less than £100.
Bear in mind that excess insurance only pays out if the claim is worth more than the excess. For example, if you had an excess of £500 but the claim was only £200, neither your car insurance policy nor your excess cover would pay out.
It’s important to be able to afford the total excess on your car insurance. Ideally, you’d keep this amount of money in a savings account, just in case.
Otherwise, you’d need to get the money from somewhere – such as an overdraft or credit card – to get your car repaired and returned to you.
In the worst-case scenario, the insurer might reject your claim if you couldn’t afford to pay the excess amount.
There are some situations where a higher or different type of excess might apply to car insurance.
The excess on a windscreen repair is usually separate from, and a lot less than, the standard excess on your car insurance policy. For example, with Admiral, if you have windscreen cover included in your policy, the excess would be £25 for a windscreen repair or £115 for a replacement windscreen. Some insurers don’t charge any excess at all for windscreens if you use their preferred windscreen repair company. Others will charge an excess for replacements but not repairs.
If your car needs repairing, you have a legal right to choose where this is done. But if you choose a garage not approved by your insurer, you might have to pay an additional excess.
You might also need to pay a high excess to find affordable car insurance if you’re a new or inexperienced driver. Drivers under the age of 21 usually have a higher compulsory excess than older drivers, as they’re statistically more likely to be involved in an accident.
If you have a history of motoring convictions or drink driving or a past driving ban, you may need to agree to a higher voluntary excess to find affordable car insurance. This is because insurers will view you as high risk.
The same goes if you drive an expensive or high-performance car. These vehicles are more desirable to thieves and often cost more to repair.
