Vehicle Insurance Excess: What's The Deal?

Car insurance excess is the amount you must pay towards the cost of a claim made on your insurance. There are two types of excess: compulsory and voluntary. The compulsory excess is set by the insurer and can't be changed, whereas the voluntary excess is an amount chosen by the policyholder. The total excess is the sum of the compulsory and voluntary excesses. If you make a claim, you must pay the total excess upfront or it will be deducted from any settlement.

Compulsory vs. voluntary excess

When it comes to vehicle insurance, the excess is the amount you must pay towards the overall cost of an insurance claim. There are two types of excess: compulsory and voluntary. Understanding the difference between these two is essential when considering your insurance options.

Compulsory Excess

The compulsory excess is a fixed amount set by your insurance provider that you must pay towards the cost of a car insurance claim. It is non-negotiable and depends on factors such as your age, driving experience, the type of car you drive, and the type of claim. For instance, new and young drivers often have a higher compulsory excess due to being considered higher-risk. Similarly, driving a luxury or high-performance car can result in a higher compulsory excess due to the increased risk of theft and higher repair costs.

Voluntary Excess

Voluntary excess, on the other hand, is an amount that you, the policyholder, choose to pay on top of the compulsory excess. This amount is flexible and can be adjusted to suit your financial circumstances. Increasing your voluntary excess can be a strategic way to lower your insurance premium. However, it is crucial to ensure that the total excess (compulsory + voluntary) remains affordable, as you will need to pay this amount upfront when making a claim.

The key difference between compulsory and voluntary excess lies in who sets the amount: the insurance company or the policyholder. Compulsory excess is set by the insurer and cannot be changed, whereas voluntary excess is chosen by the policyholder and can be adjusted. It's important to remember that if you make a claim, you will need to pay both the compulsory and voluntary excess amounts. Therefore, when deciding on your voluntary excess, it is essential to consider your financial situation and choose an amount that you are confident you can pay if needed.

Excess insurance

There are two main types of excess insurance policy: single-policy excess insurance and lifestyle excess insurance. Single-policy excess insurance covers the excess for just one insurance policy, such as your car insurance. On the other hand, lifestyle excess insurance can cover the excesses for various insurance policies you may have.

The number of times you can claim excess insurance depends on the policy you choose. Some insurance providers limit the number of times you can claim, while others put an overall limit on the amount you can claim for.

While excess insurance may seem like an unnecessary additional cost, it could save you money in the long run. However, it is important to read the small print to know exactly what you are covered for and how much it will cost.

Furthermore, it is worth noting that excess insurance is separate from the concept of compulsory and voluntary excess in car insurance. Compulsory excess is the amount set by your insurer that you must pay towards any repair done to your vehicle if you cause an accident. On the other hand, voluntary excess is an optional amount on top of the compulsory excess, which lowers your annual premium price.

When to pay excess

Excess is the amount you pay towards the cost of your claim for each incident covered by your policy. You will need to pay excess when you make a claim on your own insurance. The amount of excess you pay when you claim may vary depending on the voluntary excess amount you chose to pay, your driving experience, and the make and model of your vehicle.

There are two types of excess: compulsory and voluntary. Compulsory excess is the fixed amount pre-set by your insurer to be paid if you make a claim on your car insurance. The excess level tends to be higher for new drivers with less driving experience, or those who live in high-risk areas or drive high-performance cars. Voluntary excess is an extra payment you pay on top of your compulsory excess if you get in an accident. You can choose your own voluntary excess, but it must be an amount that you could afford to pay if you had to make a claim.

You will only need to pay this excess to repair damage done to your vehicle in an accident that is fully or partially your fault. For example, if you run into the back of another car, your insurance company will handle the repairs to both vehicles, but you’ll be expected to pay the excess for damage that’s done to your car. On the other hand, if another car drives into you, you won’t have to pay any excess, as the other person’s insurance company will pay for the repair to your car.

You only pay car insurance excess when you make a claim on your own insurance. You don't pay excess if you make a claim on someone else's insurance, or if someone else (a "third party") makes a claim on your insurance. In theory, this means you only pay excess for damage to your own car, and only when the accident is your fault. If it's not your fault, you can claim on the other person's insurance.

How much voluntary excess to pay

When it comes to vehicle insurance, the excess is the amount you must pay towards the overall cost of an insurance claim. There are two types of excess: compulsory and voluntary. The compulsory excess is set by the insurer and can't be changed, whereas the voluntary excess is chosen by the policyholder and is paid on top of the compulsory excess.

When deciding on the amount of voluntary excess to pay, it is important to consider your financial circumstances and the level of risk you are comfortable with. Choosing a higher voluntary excess can lower your monthly insurance premiums, as you are taking on more of the financial burden in the event of a claim. However, it is crucial to ensure that the total excess (compulsory plus voluntary) remains affordable, as you will need to pay this amount upfront if you need to make a claim.

When determining how much voluntary excess to pay, it is recommended to weigh the potential savings on premiums against the likelihood and potential cost of making a claim. If you consider yourself a safe driver with a low risk of accidents, you may be more inclined to choose a higher voluntary excess to reduce your premiums. On the other hand, if you feel that making a claim is more probable, opting for a lower voluntary excess may be more prudent, even if it means paying higher premiums.

It is worth noting that the excess may vary depending on factors such as your age, driving experience, the type of car you drive, and the nature of the claim. Additionally, certain policies may have additional compulsory excesses, such as for young or high-risk drivers, or for luxury or high-performance vehicles.

Before selecting an insurance policy, it is essential to understand the terms and conditions, including the excess requirements and when you will need to pay the excess. Comparing different insurance providers and their excess options can help you make an informed decision that aligns with your financial situation and risk tolerance.

What happens if you can't pay

If you can't pay your car insurance excess, your insurer may refuse your claim or deduct the excess amount from the payout towards repairs. This would mean that you would have to pay the excess amount directly to the garage or mechanic.

It is important to check your policy to find out how this situation would be handled. Contact your insurer to discuss your options, as they may be able to give you longer to pay or agree to a payment plan.

If you are worried about not being able to pay the excess, you could consider purchasing excess protection insurance. This is a separate policy that will cover the cost of your excess if you need to make a claim. However, you will still need to pay the excess initially, and then claim this back from your excess insurance policy.

Frequently asked questions