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Car excess insurance explained

Written by Kasey Cassells, Senior content editor

15 March 2019

If you make a claim on your car insurance, paying the excess can be expensive. However, excess insurance is designed to help you recoup the costs. Read on to find out more about excess insurance and whether it’s right for you.

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What is excess insurance?

Some providers offer a type of policy called 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. 

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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 excess insurance – usually somewhere between £250 and £750. It tends to make the most sense to set it at the same amount as your car insurance excess. 

Keep in mind, however, that excess insurance is another premium that you will have to pay, and you may end up paying for a product you don’t need if you don’t make a claim during the term of the policy. That said, many excess insurance policies only cost a couple of pounds a month.

Excess insurance is more commonly available when you hire a car, as the excesses charged by hire companies can typically be very costly and avoided with a one-off fee. But you can also choose to set a high excess on your car insurance policy and buy excess insurance to cover it.

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. If you choose an excess of £750 and the claim costs less than that – say £700 – neither policy will pay out. You must pay that £700 yourself.

What are the types of excess insurance?

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. 

When do you pay an excess on car insurance?

If you make a claim on your car insurance policy you’ll be required to pay an excess.

This means if, for example, you make a successful claim for £500 and your excess is £100, your insurer will pay you £400 to cover the cost of repairs to your car and essentially you will pay for £100 of the claim (no matter how much the claim is for).

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 as it wouldn’t be economical to pay for an excess charge in this case. 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.

A good price comparison website will clearly show the total excess you will have to make in the event of a claim. The excess is usually split into two parts, so you should be able to see both the compulsory and voluntary amount. You should also be able to easily adjust your voluntary excess level to see how this affects the cost of your premium.

What is compulsory excess?

The compulsory excess is, as the name suggests, a mandatory amount to pay as set by your insurer.

What is voluntary excess?

The voluntary excess is an amount you can opt to pay. Choosing to pay a voluntary excess can save you money as most insurers will offer you a cheaper premium for doing so. 

Is a voluntary excess worth it?

The higher your voluntary excess, the less you’ll pay for your car insurance. But remember that you will have to pay this amount if you need to make a claim.

It’s therefore important to choose a realistic amount that you can afford to pay 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 take out a voluntary excess when purchasing your insurance then opt not to pay it when the time comes to claim.

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How much does car insurance excess cost?

The cost of car insurance excess varies with different policies and depending on whether you choose to have a voluntary excess as well as a compulsory one.

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.

How do I claim on my excess insurance policy?

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 fill in and 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. 

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.

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