Car Insurance Excess - What is it?

Car insurance excess is the amount of money you have to pay in the event that you are deemed to be at fault for a car insurance claim. Your excess usually consists of a voluntary excess (this is something you can adjust when taking out a policy) and a compulsory excess (added by the insurer, this is usually higher for young and inexperienced drivers).

In most scenarios the car insurance company deducts any excess from the payout you will receive e.g if you have a £200 excess and make a £3,000 claim, the insurer will pay out £2,800. In some circumstances (such as when the party to blame is being disputed) you may be asked to pay your excess up front so your insurer can authorise the repair, they will then pay this back if it is decided you were not at fault.

Compulsory Excess And Voluntary Excess

Some car insurance policies have a compulsory excess which must be paid, whereas a voluntary excess only applies if the driver has chosen to have it added to their policy.

A compulsory excess is common with young and inexperienced drivers, with many drivers under 21 facing high excesses. This tends to comes down with age and drivers aged over 25 will often not face any compulsory excess.

A voluntary excess can be used to help reduce your insurance premium and to gain cheaper car insurance. By increasing the voluntary excess you will normally receive a cheaper quote, the downside to this is that in the event of a claim the voluntary excess in addition to any compulsory excess can work out to be expensive.

Car Insurance Excess Example

  • Car Value: £1000
  • Driver Age: 21
  • Compulsory Excess: £250
  • Voluntary Excess: £250

If this driver had a claim where they were at fault they would be faced with a total excess of £500 and would receive a payout of £500 (£1,000 - £500 excess).

Please Note: If you are making theft claim the insurance company will consider this to be an "at fault" claim.

It is always worth calculating what would happen in the event of a claim and whether it is worth having a high voluntary excess on a low valued car. Take a look at how you can use car insurance excess to get cheaper car insurance.