In the world of insurance, the term 'excess' refers to the amount you agree to pay your insurance company should you need to make a claim.
When you're taking out a car insurance policy, the provider will let you know at the time of making the agreement, how much your voluntary and compulsory amount of excess will be.
The compulsory excess is, as the name suggests, a mandatory amount to pay as set by your insurer.
The voluntary excess is an amount you can opt to pay in addition to the compulsory excess. Choosing to pay a voluntary excess can save you money as most insurers will offer you a cheaper premium for doing so.
The amount of excess you will pay will vary based on the insurance company and also decisions you make. So for example, you might agree to pay a voluntary amount of £100, with a compulsory excess amount set at £200. Meaning should you make a successful claim, in total you will be expected to pay £300 towards the cost, before the insurer steps in to cover the remainder.
If you were involved in an accident and the insurer finds that it wasn’t your fault, you will usually be able to claim the excess back — although you may be expected to pay the excess while the accident is being investigated.
Your insurer will usually not pay out for a claim that costs less than your excess. Instead, they might recommend that you pay for repairs yourself.
Insurers use excess charges to prevent people making claims for lots of small issues, which would eventually drive up the cost of car insurance for everybody. These include anything from a dink to the car door in a supermarket car park, to a chip on the paintwork.
In theory, the higher your voluntary excess, the less you’ll pay for your car insurance. But it’s always worth seeing what the difference is if you select £0 voluntary excess.
If the voluntary excess reduces your premium, pause to consider whether you could afford to pay up in the case of a claim, and bear in mind that most insurers will refuse to quote if you choose a voluntary excess that is close to the value of your car.
While a voluntary excess is an amount you choose yourself, it’s no longer negotiable when you make a claim – you cannot choose to include a voluntary excess amount when purchasing your insurance, then choose not to pay it when the time comes to claim.
Most insurers will charge a higher compulsory excess for young and new drivers as they are seen to be more likely to claim than older, more experienced drivers.
Many policies have different levels of excess for different types of claim, so check your policy carefully. For example, windscreen claims are fairly common and low cost, so many insurers charge a lower excess for windscreen repairs.
Remember you won’t have to pay any excess at all if you don’t need to make a claim during the yearly term of your policy.
Some providers offer a type of policy called car excess insurance, which sits alongside your car insurance policy. Excess insurance allows you to claim back your excess if you make a claim on your car insurance.
The total amount you can claim back will vary depending on the amount agreed between you and your insurer. You’ll be able to choose the upper limit of your total excess insurance – usually up to £750.
Keep in mind that excess insurance is another premium that you will have to pay, and you may end up paying for a product you don’t draw on. That said, many excess insurance policies only cost a couple of pounds a month, so you may welcome the peace of mind it offers.
Excess insurance is more commonly available when you hire a car, as the excess amounts charged by hire companies can be very costly. By purchasing car excess insurance you can avoid any unwelcome additional costs.
A word of warning: excess insurance only pays out if your car insurance pays out for a claim. That means the claim must worth more than your excess. There would be no pay out if you choose an excess of £750 and the claim costs less than that.
There are two main types of excess insurance:
single policy excess insurance: this covers the excess on one insurance policy only – often your car insurance
lifestyle excess insurance: this covers the excess on different types of insurance policies, such as car insurance, home insurance and travel insurance. Bear in mind that your excess limit is applied to all policies
It’s best to claim on your excess insurance policy as soon as possible after making your main claim with your car insurance provider. Some insurers won’t pay out if you claim more than 30 days after the incident occurred.
To claim, you will need to contact your excess insurance provider and then submit a claims form. You may need to do this online via the company’s claims portal, by email or by post, and you will usually need to provide:
a copy of your excess insurance policy
a copy of your car insurance policy
a police report if they attended the incident
photographs of any damage to the vehicle
a copy of the settlement letter from your insurer to confirm the excess you have paid
your bank details so that your claim can be paid
If your excess insurance policy was taken out for a hire car, you will also need to provide your car rental agreement and an accident report from the car hire firm.
Car insurance claims are usually paid out within 12 to 15 working days, although it can take longer. You may have had to pay your main car insurance excess up front and be reimbursed it once your excess insurance claim is settled.