Car insurance excess. We get it, this isn't exactly the sort of phrase that sets the heart pumping.

But, like it or not, it's a crucial aspect of the car insurance industry and something you must get your head around - or you could face an expensive headache down the road.

Put simply, the 'excess' on your car insurance is the amount of money you have to pay if you make a claim after an accident.

But it gets a little more complicated…

Here's our ultimate guide on car insurance excess, from the difference between compulsory and voluntary to what happens if you can't pay 👇

Compulsory excess

There are two different types of car insurance excess: compulsory (sometimes called "mandatory") and voluntary.

Let's start with compulsory excess.

This is the amount you must pay if you get in an accident. Your insurer will usually cover most of the damage (although it depends on the specific details of the incident) but you will nearly always need to pay a portion of it.

This compulsory excess figure is set by your insurer and usually based on lots of different bits of information about you - just like how your car insurance premium is calculated.

That means your excess can be affected by your:

Age

Younger drivers tend to pay more for their insurance than older or more experienced drivers. Unfortunately for them, younger drivers also tend to get a higher excess. If you're under 25, your excess might be bumped up quite a bit.

Postcode

People who live in areas where there are lots of crashes, claims and thefts pay more for their car insurance. You'll also see your excess go up if you live in a "high-risk" area.

Car

The car you drive can have the biggest impact of all.

You might get a higher excess is you drive a car that has:

• A powerful engine
• Few safety features
• Parts that are expensive to get hold of or repair

So if you're driving a brand new, high-spec car that cost a fortune, you'll probably get a higher excess than on an old, cheap, low-performance car.

Imported cars tend to have a higher excess, too. It's because insurance companies tend to see them as "higher risk".

You can check all the details about your car for free.

Insurance company

And, just like your premium, different insurers will charge different excess.

You can change your insurer, but you can't change the compulsory excess of the insurer you choose.

Voluntary excess

Voluntary excess is an extra payment you pay on top of your compulsory excess if you get in an accident.

You can choose your own voluntary excess. In fact, you don't have to set one at all.

But here's the catch: the higher you set it, the cheaper your car insurance premium will usually be.

Although having a higher voluntary excess tends to make your premium cheaper, you need to make sure you choose an amount that you could afford to pay if you had to make a claim.

Total excess

When you make a claim, you have to pay compulsory and voluntary excess (if you have it).

When you add them together, you get your "total excess".

This is the number that matters. When you make a claim, this is what you'll have to pay.

So let's say you have a compulsory excess of £150, and a voluntary excess of £300. That would mean you'd need to pay £450 if you made a claim on your insurance.

(We think "compulsory excess" and "voluntary excess" are pretty unhelpful terms. It's better to think of it as one big excess, with "compulsory" excess being more like a "minimum excess". But insurers like to talk about compulsory and voluntary excess, so we thought it was worth explaining them here.)

How much voluntary excess should you pay?

It depends. If adding a higher voluntary excess only knocks a tiny bit off your car insurance price, the amount you'd have to pay to make a claim might not be worth it.

Your best bet is to get a few different quotes with different amounts of voluntary excess, and see how it affects the price of your car insurance. Then pick whichever one suits your personal circumstance best.

When do you pay an excess on car insurance?

You only pay car insurance excess when you make a claim on your own insurance. You don't pay excess if you make a claim on someone else's insurance, or if someone else (a "third party") makes a claim on your insurance.

In theory, this means you only pay excess for damage to your own car, and only when the accident is your fault. If it's not your fault, you can claim on the other person's insurance.

How do you pay an excess?

You pay car insurance excess when you make a claim for damage to your car on your own insurance. But you don't have to pay it in a lump sum.

Most of the time, when you make a claim, your insurer will take the excess away from your payout. That means you usually can't pay for your excess in instalments.

And that means you don't need to send over a big chunk of money to your insurance company - you just get a little less than the full payout from them.

Let's say you had to make repairs to your car that cost £2,000, and your excess was £500, your insurance company would pay £1,500 to the garage that did the repairs. And then you'd have to cough up the last £500 directly to the garage.

That means you don't (usually) have to pay your excess as soon as you make a claim.

Disputed claim excess

It gets a little more complicated when it's not clear straight away whose fault an accident was.

If it isn't clear, you won't be able to claim on their insurance. Because while the detective work is being done, the other person's insurer won't pay out for you.

This is tricky if you need to make repairs to your car, because you'll need your insurance to pay out as quickly as possible.

If so, you'll need to claim on your own insurance. And that means you'll have to pay excess, both the compulsory and voluntary parts.

You can get the money back if it later turns out you weren't at fault.

Your insurer will get their money back from the other person's insurer. And sometimes, they'll get your excess back for you, too. But a lot of the time you have to do this yourself, by getting in touch with the other person's insurer. (It's called "uninsured loss recovery").

Check your policy docs

Different insurers will have different ways of approaching things, so always check your policy docs.

Some will waive the excess if it's clearly not your fault. Some will only charge you if they can't get it back from the other person's insurer, and some charge you up front and pay it back once they've got the money from the other person's insurer.

If you get into a scrape that's your fault (it happens to the best of us), it might not be clear that it was your fault until all the detective work has been done.

So the other driver might claim on their insurance to cover the cost of their repairs, if they have a comprehensive insurance policy. That means they'll have to pay their excess.

Once it becomes clear that the incident was your fault, the other driver's insurance company will speak to your insurance company to cover the cost.

Windscreen, fire and theft claims can have a different excess

Sometimes, your insurer will charge different amounts of excess for different kinds of claim. If you need to make a claim for damage to your windscreen, for example, the excess might be lower.

Most insurers charge the same excess for fire and theft claims. But some don't charge excess at all for those kinds of claims. (Check your policy docs.)

And sometimes the compulsory excess will be higher for certain kinds of claims.

As ever, it depends on your insurer. Check your policy documents to see exactly what you'll need to pay when you make a claim.

When should you claim?

The point of an excess is to stop people making claims for tiny amounts of damage. So you need to think about whether it would be cheaper to repair it yourself.

For example: in most cases, car insurance covers scratches and dents. Especially if your car insurance is comprehensive. But the amount you'd have to pay in excess usually means it's cheaper to fix those smaller bits of damage yourself, rather than making a claim on your insurance.

That's assuming it's your fault. If it's not, and you want to claim on the other person's insurance, you'll usually still have to make a claim on your own insurance and then get the money back from the other person's insurer later.

Even if you don't make a claim, you should still tell your insurer when you get in a scrape. Keeping that stuff secret could mean your car insurance gets cancelled or voided.

What happens if you can't pay your car insurance excess?

Your insurer usually takes your excess away from the pay out. So you don't need to afford your excess exactly - you just need to be able to afford whatever's leftover for your repairs.

So, if you claimed £5,000, and you had an excess of £500, the insurer would pay out £4,500.

If you needed that £5,000 to pay for your repairs at a garage, you'd be left £500 short, and you'd need to find a way to cover that bill yourself.

What's excess insurance?

And just to make things a little more confusing, "excess insurance" - or "excess cover" - is a slightly different thing altogether.

Excess insurance is a policy that covers your excess if you have to make a claim. So it's like an insurance policy that will pay off the excess on your car insurance policy. Yep… this is like the insurance equivalent of those Russian nesting dolls!

It's a completely separate insurance policy to your main one. You usually just get excess insurance when you rent a hire car, whereas it's not as common with regular car insurance policies.

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