Car Insurance Excess Explained

By Mike Wilcox – Car Insurance Comparison Policy Editor, London UK

People know that car insurance companies pay to have a car repaired after an accident. They also may know that they will need to pay premiums to the car insurance company in order to keep it active; if they stop paying these premiums, they are no longer covered by their car insurance policies. If they are the ones who caused the accident, one other thing they will have to pay is the excess.

Voluntary Excess 

After policy holders file a claim to have their cars repaired, they will have to pay the excess and it will either be voluntary or compulsory. The voluntary excess is an amount that the policyholder will have the ability to set, but it isn’t required that these people add this to their policies. At times, the car insurance company will impose an excess on their clients and this is the compulsory excess.

Compulsory Excess

People who often are forced to accept a compulsory excess are young drivers because they are inexperienced and more likely to file a claim. These excesses tend to be very high, especially if they are under 21. After the age of 25, car insurance companies can begin to stop requiring their policy holders accept a compulsory excess.

Different Compulsory Excess for Different Claims

The compulsory excess can be different for different types of claims. For one type of cover, the excess may be one amount, but another type of cover will require an entirely different amount. Different types of vehicles may mean that the insurance companies will charge a different excess. It also depends on the car insurance company and that is one of the reasons that people need to compare quotes from several car insurance companies.

Voluntary Excess for Lower Premiums

After the age of 25, policy holders may be free of the compulsory excess, but some people choose to add a voluntary excess to their policies. They do this when they want to receive a lower quote for their auto insurance. The higher the voluntary excess that people set, the lower their car insurance premiums can be.

A voluntary excess can lower car insurance premiums because it lowers the amount of money that car insurance companies have to pay out when people file a claim. For example, the voluntary excess may have been set at 300 pounds. If the amount of the claim is 2,000 pounds, the car insurance company pays 1,700 pounds for the repairs.

When a High Excess Is Not Advantageous

Setting a very high voluntary excess can hurt policy holders at times. One of those times would be when who caused the accident is in dispute. After an accident, drivers would like to have their cars repaired as soon as possible. If it cannot be immediately determined who caused the accident, the policy holders will be required to pay their excesses before the company authorises the car to be repaired.

Another time a high voluntary excess will cause repairs to be very costly is when people also have a compulsory excess. They may set a high excess to lower their premiums, but this will be on top of the compulsory excess that they will have to pay. If they can afford to pay the amount of the excesses, setting a high excess may be a good thing for them.

When considering whether or not to have a high excess, policy holders will need to learn exactly how much the savings will be. Sometimes, when policy holders offer to raise their excesses, the car insurance companies do not reward them with a very large discount. In these cases, they will pay a high excess if they ever need to file a claim, and they will also continue to pay high premiums throughout the year. If raising the excess doesn’t result in a significant discount, these policy holders would be better off keeping their excesses lower.

The excess is something that can lower people’s premiums. It may also be imposed on them without lowering the premiums and can be set very high like for young drivers and those who have filed several claims in the past. But, it is one more thing that people need to be prepared to compare when they are comparing quotes from several car insurance companies. Get started with Car Insurance Comparison now and get a cheaper quote for your next renewal.