What is an insurance excess?

In the UK, it’s illegal to drive without having car insurance ready to cover you if you have an accident. It’s easy to shop around for this insurance using comparison websites, but it’s equally easy to overlook a very important part of an insurance policy – the excess.

What is an excess?

Put simply, the excess is the sum of money you’re obliged to pay should you make a claim on your car’s insurance policy. You are expected to pay if you are deemed to be at fault for the incident that caused the damage.

There are usually two parts that make up your excess. The compulsory excess is calculated based on your age, the type of claim you make and the type of car you drive. The voluntary excess sits on top of the compulsory one.

Electing to increase your voluntary excess can be a good way of lowering your annual insurance cost. Be aware, however, that doing so can mean you’re hit with a nasty bill in the event that you do make a claim.

How does an excess work?

When you make a claim, your insurance provider will deduct the excess from the total payout you receive. For example, if you have a £400 excess and make a £5,000 claim, your insurance company will pay you £4,600 to replace or repair your car.

This means if your excess is £500 and your repair work is going to cost £600, your insurance company will only pay out £100 – so it’s probably not worth claiming.

What if the accident isn’t my fault?

If the accident isn’t your fault then you may still have to pay your insurance excess. If you’re found not at fault then your insurer should attempt to claim the excess payment back from the at-fault driver’s insurance.

Safe driving out there!

What next?

Check out our independent guides to road tax and car insurance and, once you’re clued-up, learn about the best ways to buy a car with our guides to PCP and HP finance. See a list of fantastic discounts on our deals page or pick your ideal motor with our car configurator.