Car insurance excess explained

4 min Read Published: 02 Jun 2021

What is car insurance excess?

Car insurance excess explainedThe excess on a car insurance policy is the amount you will have to pay out of your own pocket if you claim on your policy. So, for example, if you have a car insurance policy with a £250 excess and make a claim for a total of £2,000 your insurance would only cover £1,750 of your claim. Car insurance excess is designed to reduce the number of small claims made as policyholders often find it uneconomical to make a claim when the excess is taken into account.

The total excess on your policy is typically comprised of a compulsory excess, one you have to include, and a voluntary excess, an excess that you can choose to include in addition to the selected compulsory amount.

What is the difference between voluntary and compulsory excess?

Compulsory excess explained

Compulsory excess is set by the insurance company dependent on a number of factors such as a driver's age, location, claims history and car type. Insurance companies will set their own compulsory excess and this may differ between providers. Some policies will also have a separate windscreen excess amount that you will pay if your windscreen is damaged and needs replacing.

Voluntary excess explained

Voluntary excess is an amount selected by the policyholder and is in addition to the compulsory excess set by the insurance company. Choosing a higher voluntary excess will reduce the premium you will pay.

When is car insurance excess paid?

Any excess included in your car insurance policy will be payable when you make a claim for an accident that was your fault and will usually need to be made upfront in order to get the claims process moving. If the accident or damage was not your fault then you wouldn't normally be expected to pay any excess. With some claims, it may not be clear who was at fault and the responsibility may be deemed to be shared and so both parties may have to pay the excess on each of their respective car insurance claims.

What effect will increasing my voluntary excess have on my car insurance premium

Increasing the amount of voluntary excess you pay per claim will have the effect of reducing the premium you pay. The following table demonstrates how this can impact the annual car insurance premium.

Insurer No voluntary excess £150 voluntary excess £250 voluntary excess £350 voluntary excess
LV £624.01 £546.01 £495.47 £482.83
Admiral £716.80 £669.76 £649.60 £637.28
More Than £706.72 £666.37 £644.50 £644.46
Churchill £869.31 £811.37 £770.66 746.79

Policyholder age 40 with 5 years NCD. Quotes based on a 2018 Ford Focus (2 litre)

As the above examples demonstrate the impact of adding and increasing the voluntary excess differs between insurance providers and will also differ between insured vehicles.

Is car insurance voluntary excess worth it?

As mentioned earlier the higher the voluntary excess you choose, the lower your car insurance premiums will be. When searching for car insurance quotes it is always worth comparing quotes with different excess amounts and via various different providers (as illustrated in the table above). Once you have completed this exercise you can easily select the car insurance policy that is best suited to your needs with the total excess that you are comfortable choosing.