Guide to car insurance excess

How does car insurance excess work?

Your excess is a set amount that you pay your insurer if you need to make a claim. This amount is agreed when you take out your car insurance policy. There are two types – compulsory and voluntary. 

Compulsory and voluntary excess on car insurance

• Your insurer sets the compulsory excess. The amount you pay will depend on the type of policy you have, your age and the kind of car you drive.
• The voluntary excess is controlled by you. You decide on the amount you want to pay for voluntary excess and you generally set this when taking out your policy.

Do you have to add voluntary excess on your car insurance?

No, as the name indicates, you don’t have to add a voluntary excess to your policy. You can decide how much the voluntary excess is set at before you start your policy. 

How does voluntary excess work?

An increase in your voluntary excess may lower your premium payments. So, if you decide to up your voluntary excess to keep the cost of your insurance down, make sure you can still afford it if anything happens.

Say your voluntary excess is £75, your compulsory excess is £125, and you make a claim for £600. In this scenario, you'd pay the first £200 towards the cost of getting your car fixed, and your insurer would pay the remaining £400. But if your voluntary excess was £500 and your compulsory excess was £100, you'd have to pay the entire £600 yourself. 

Paying more voluntary excess could be for you. However, you should consider your total insurance excess and make sure it’s at a level you feel comfortable paying, in case you ever need to make a claim. Don’t raise your voluntary excess beyond what you could afford to pay towards a claim. 

What if my car insurance excess costs more than the repairs?

If your total excess works out more than the cost of fixing something minor, you could pay for the repair yourself and not make a claim. It might be worth talking to your insurer about lowering your voluntary excess if you think your total excess amount is too high. 

Report all incidents – claim or no claim

 Always tell your insurer as soon as you become aware of any incident that might lead to a claim, even if you choose not to claim. 

Otherwise, it’s possible you won’t be covered down the line. For example, if the damage turns out to be worse than you thought – or if another car was involved and you have to pay for those repairs too.

Can I pay my car insurance excess in instalments?

In the UK, you would usually need to pay the excess as a lump sum when you make a claim. Some insurers offer excess cover though, meaning your excess should be refunded once a successful claim has been settled.

What about an accident that was someone else's fault?

In most cases, if something goes wrong with your car and you're not at fault, you won’t have to pay your car insurance excess. But bear in mind that not all insurance companies are the same, so check your policy to be sure.

A few things to remember

You're in control – Shop around, compare quotes, and choose a voluntary excess that suits your budget (or skip it altogether).

Weigh up the costs – Remember, the higher the excess, the more your repairs could end up costing you.

Ask questions – If there's anything you're not sure about, speak to your insurer.