Extra Auto Insurance Money: Where Does It Go?

When you make a claim on your auto insurance, you will be required to pay an excess, which is an amount of money that you must contribute towards the cost of repairs. The excess amount is usually set by the insurance company and is based on factors such as your age, driving experience, and the type of vehicle you drive. The excess can be divided into two parts: compulsory and voluntary. The compulsory excess is the minimum amount you must pay, while the voluntary excess is an optional amount that you can add to reduce your insurance premium. If you are unable to pay the excess, your insurance company may refuse your claim or deduct the excess amount from the repair bill. It is important to carefully review your insurance policy to understand how the excess will be applied in the event of a claim.

Excess insurance can be purchased to cover the cost of your excess

When you make a claim on your car insurance, you will usually have to pay a compulsory excess, and sometimes a voluntary excess on top of that. The compulsory excess is set by the insurer and can't be changed, whereas the voluntary excess is an amount chosen by the policyholder. If you make a claim, you pay both the voluntary and compulsory excess amounts.

Excess insurance, also known as excess cover, is a separate policy that can be purchased to cover the cost of your excess. This type of insurance can be bought as a standalone policy or added as an optional extra to your main insurance policy. It is more common to get excess insurance when renting a hire car than with regular car insurance policies.

Excess insurance will cover your excess if you have to make a claim. You will still need to pay the excess initially, but you can then claim this money back from your excess insurance policy. For example, if your total excess is £300, you pay this to your insurer, and then your excess insurance will refund you up to the limit of your excess cover policy.

Excess insurance policies have limits, which can range from £250 to £2,000. The premium for excess insurance is typically a one-off amount that includes insurance premium tax.

If you can't pay the excess, your claim may be refused

If you're unable to pay your auto insurance excess, your claim may be refused. However, this depends on your insurance contract and policy. Here are some important things to know about excess and its impact on your insurance claim:

Understanding Excess

Excess refers to the amount of money you are required to contribute when making an insurance claim. It is your out-of-pocket expense when repairs are needed for your vehicle. The rest of the repair cost is typically covered by your insurance policy. For example, if your repair bill is $10,000 and your excess is $500, you pay the excess amount, and your insurer covers the remaining $9,500.

Most policies require you to pay an excess unless certain exceptions apply. Here are some common scenarios where you may need to pay an excess:

• You are at fault for the accident.
• The accident was not your fault, but you couldn't obtain the other driver's details.
• Your car was damaged by an event like a hailstorm.

Factors Affecting Excess

The amount of excess you pay can vary based on several factors, including your age, the type of car you drive, and the area you live in. Younger and less experienced drivers often have a higher excess. Additionally, if you live in an area with a high number of crashes, claims, or thefts, your excess is likely to be higher. The car you drive also plays a significant role, with newer and more expensive cars often resulting in a higher excess.

Dealing with Excess Payment Difficulties

If you are unable to pay the excess, it is important to communicate this to your insurer. They may work with you to find a solution, such as agreeing to a payment plan or reducing the amount owed. Financial counsellors can also provide support and guidance if you are experiencing financial hardship. It is important to review your insurance policy documents to understand your rights and responsibilities regarding excess payments.

The excess amount is based on factors such as your age, experience, and type of vehicle

The excess amount you pay on your auto insurance is influenced by several factors, including your age, driving experience, and the type of vehicle you own.

Younger and less experienced drivers typically face higher insurance rates and excess amounts. This is because teenagers and young adults have a higher risk of being involved in car accidents, with a crash risk nearly three times higher than that of drivers aged 20 and older. As a result, insurance companies view them as high-risk drivers. Additionally, male drivers under the age of 19 are three times more likely to get into accidents than female drivers of the same age group. Consequently, young male drivers may face even higher excess amounts. As drivers gain more experience and maintain a clean driving record, their excess amounts tend to decrease.

The type of vehicle you drive also impacts your excess amount. If you own a brand-new, high-spec car, or a vehicle with expensive or hard-to-find parts, your excess is likely to be higher. This is because repairing such vehicles can be more costly. Similarly, imported cars are often considered "higher risk" by insurance companies and may result in a higher excess.

The excess amount on your auto insurance is a crucial factor to understand, as it directly affects your financial responsibility in the event of an accident. By considering factors such as age, experience, and vehicle type, insurance companies determine the excess amount you will be required to pay when making a claim.

You may have to pay excess immediately to start a claim

When making a claim on your car insurance, you will need to pay an excess. This is the amount of money you pay towards the cost of repairs. The rest is covered by your insurance provider. For example, if your excess is £400 and the cost of repairs is £1000, you will pay the excess and your insurance provider will cover the remaining £600.

The excess is made up of two parts: the compulsory excess, which is set by the insurance company and is based on the type of vehicle you drive, your age, and your experience; and the voluntary excess, which is an optional amount you can add on top of the compulsory excess to reduce the price of your premium.

In some cases, you may have to pay the excess immediately to start a claim. The excess may also be deducted from the repair bill at the end of the claims process.

If you are unable to pay the excess, your insurance provider may refuse your claim or deduct the amount from what it pays towards the repairs. For example, if the cost of repairs is £2000 but you cannot afford to pay the £250 excess, your insurance provider will only pay £1750 towards the repairs. You will need to arrange to pay the outstanding amount directly to the garage.

If you are unable to pay the excess, you should contact your insurance provider to discuss your options. They may be able to agree to a payment plan or reduce the amount owing. You can also seek advice from a financial counsellor or lawyer. It is important to note that your insurance provider cannot reject your claim just because you cannot pay the excess.

If it wasn't your fault, you might not have to pay the excess

When it comes to auto insurance, the 'excess' is the amount of money you are required to pay if you make a claim after a road accident. There are two types of excess: compulsory and voluntary. The former is set by the insurer and is influenced by factors such as the driver's age, location, and the type of car. The latter is an optional additional payment that can help lower insurance premiums.

In the event of an accident, the driver deemed at fault is typically responsible for paying the excess. However, determining fault can be a complex process, and there may be situations where you are not at fault but still have to pay the excess. For instance, if there is a dispute about who is at fault or if the at-fault driver is uninsured or flees the scene, you may have to pay the excess initially and then seek reimbursement.

To avoid paying the excess in a non-fault accident, it is advisable to gather as much evidence as possible to prove your lack of fault. Additionally, you can use a credit hire company, which will cover the cost of hiring a replacement vehicle and repairs, and then claim these costs from the at-fault driver's insurance company. Alternatively, you can contact the at-fault driver's insurance company directly and have them cover the costs without involving your own insurance policy and excess.

Frequently asked questions