What Is Excess On Car Insurance And How Does It Work?

Car insurance policies often include an excess, which is the amount you agree to contribute towards a claim before your insurer pays the remaining costs.

Understanding how excess works can help you compare policies more effectively and choose cover that suits your circumstances and budget.

What This Guide Covers

This guide explains:

• What insurance excess means

• The difference between compulsory and voluntary excess

• How excess affects your premium

• When excess is payable

• How to choose an appropriate excess level

For this reason, understanding excess is an important part of comparing car insurance policies.

Types Of Excess

Compulsory Excess

Compulsory excess is set by the insurer and normally cannot be changed.

Voluntary Excess

Voluntary excess is chosen by the policyholder. Increasing your voluntary excess may reduce your premium, but you should only select an amount you could comfortably afford if you needed to make a claim.

Example

If repair costs total £1,500 and your combined excess is £300:

• You pay £300

• Your insurer pays £1,200

This illustrates how excess contributes towards the cost of a claim.

How Excess Affects Premiums

Many insurers offer lower premiums when a higher voluntary excess is selected.

However, the cheapest premium is not always the best option. It is important to balance potential savings against the amount you may need to pay if you make a claim.

When Is Excess Paid?

Excess may apply when claiming for:

• Accident damage

• Theft claims

• Fire damage

• Vandalism

Policy terms vary, so always review the policy wording carefully.

Choosing The Right Excess

When selecting an excess level, consider:

• Your budget

• The value of your vehicle

• Your driving history

• How much risk you are comfortable accepting

Many drivers choose an amount they could reasonably pay at short notice if they needed to make a claim.

Common Questions

Is excess paid every year?

No. Excess is normally only payable when making a claim.

Can I change my voluntary excess?

In many cases yes, particularly when arranging or renewing cover.

Does a higher excess always reduce premiums?

Not necessarily. The impact varies between insurers and policies.

nb - Understanding how excess works can help you compare policies more confidently and avoid unexpected costs if you ever need to make a claim.

nb - When reviewing insurance options, always consider both the premium and the excess amount rather than focusing on price alone.