How excess works on car insurance
An excess is a sum of money your insurance company requires you to pay in the event that you are involved in an accident and need to make a claim. An excess if usually a few hundred pounds and does not require payment upfront or every year, it only becomes applicable if your vehicle is involved in an accident, fire, flood or theft.
The idea of the excess is to eliminate the need for drivers to make small claims like scratches or minor dents and encourage policyholders to manage their risk and pay towards any accidents that they are deemed to be at fault.
So if your vehicle is involved in a road accident, the driver must pay the amount of the excess before the garage will release the vehicle and the insurance company will cover the outstanding balance.
- Your policy has a £200 excess
- There is £1,000 worth of damage to your vehicle
- You pay the garage £200 to make the repairs
- Your insurance company will pay the outstanding £800.
The excess for your vehicle is made up of two parts: compulsory excess and voluntary excess.
Compulsory Excess – How much excess is allocated by your insurer
The insurance companies we work with at Call Wiser may provide a compulsory excess which is calculated based on your risk of being involved in an accident or your vehicle being stolen. Therefore, insurers will consider a number of risk factors when assessing your excess such as age, demographic, experience on the road and value of your vehicle. High performance cars are subject to high excesses because minor repairs can be very costly to replace.
A compulsory excess can be assigned for all levels of cover including fully comprehensive policies, third party, fire, flood and theft too.
Not all drivers will be allocated a compulsory excess. However, young drivers tend to pay higher excesses because they have less experience on the road and are deemed a greater risk of making a claim. Young drivers under the age of 21 may have to pay an excess of up to £400 and those aged between 21 and 24 may have to pay up to £200.
Voluntary Excess – Choose how much excess you want to pay
The voluntary excess allows drivers to manage their risk and choose how much excess they wish to pay. This excess is decided by the driver when setting up a new policy and can be changed annually.
Selecting a high voluntary excess can drastically reduce the cost of your car insurance quote because you are agreeing to pay more towards the repairs of any vehicle damages that you cause and will probably drive more carefully if you know you have to pay more in the event of an accident.
High voluntary excesses are best suited for low risk drivers in non-busy areas and those that do low mileage every year.
When Should You Not Use Your Excess?
You will use your excess when you need to make a claim, so you should not use your excess for small and minor damages. For instance, if you have a small scratch on your car, it may cost £25 to repair but because your excess is £250, you will not be able to claim for it. However, because £25 is an affordable amount, you should be able to pay this without the help of your insurance companies. With this mind, your excess is useful for huge repair bills that run in the hundreds or thousands of pounds and are harder to pay without insurance.
If you need to have a windscreen repaired, a section in a fully comprehensive policy usually covers this. A number of insurance companies will waive the windscreen excess if the windscreen merely requires repair rather than a replacement. Insurance companies often have different windscreen excesses with the lower excesses applying if their recommended windscreen repairer carries out the repair or replacement.
Do I Have To Pay The Excess When The Accident Wasn’t My Fault?
If you can prove that the accident in question was not your fault but the fault of another driver, you can recover the full cost from their insurer and your excess will be refunded. You will usually be required to pay your excess upfront to cover the repairs and damages however this can be refunded. So just because you are involved in an accident does not mean that you will be out of pocket long term.
What is Excess Protection Insurance?
Excess Protection is something that can be added to your standard car insurance policy and allows you to protect your excess ranging from £300 to £3000. This will be a paid additional benefit and if you need to make a claim on your vehicle, you will pay your excess upfront as normal and be able to claim your protected amount back through Crusader, who provide the Excess Protection. This means that overall you will be required to make two claims instead of one but if you are someone that does a lot of mileage in adverse weather conditions, it could be very worthwhile.
You can also protect a higher amount than your current excess, to make multiple claims and recover your outlays. For example, if you excess is £150 and you opt to protect £300 of your excess, this means you can make 2 claims, pay your excess both times and claim the excess back both times too.
Useful Tips for Your Excess
When it comes to selecting your voluntary excess and making claims, Call Wiser can provide some very useful tips. For instance, you should try selecting a voluntary excess amount that you can afford bearing in mind the money you can save. By choosing an amount that is too high, you will still be required to pay this in the event of an accident and do not want to put yourself in a difficult position financially. For this reason, the typical limit for voluntary excess with the insurance companies we work with is around £500 which is considered an affordable amount.
If you are a young driver aged under 25, be sure to check what your compulsory excess is before upping your voluntary excess because you do not want to be faced with a huge excess to pay if you ever need to make a claim.
Be conscious about making claims for small amounts. Even though you might be able to make a claim for repairs on your car worth £100, by making a claim, you are losing out on your no claims bonus. With up to 80% off your car insurance with a no claims history, it is certainly worth paying out of your pocket for those small dents and repairs. Don’t forget to still notify the insurer, even if you decide to pay for the damage yourself!