What is excess in car insurance?
We all know it’s essential that you insure your vehicle as soon as you buy it – but you should definitely shop around in advance to find the best price.
Car insurance can range greatly depending on the make, model, trim or engine size in your car, not to mention where you live, where you work, how long you’ve been driving, and how old you are.
You might think you’ve found an amazing deal – but your “voluntary excess” and “compulsory excess” are high figures that can quickly add up, and you might find yourself in a very sticky situation should something go wrong.
So, what exactly is excess, and what does it all mean?
What is excess?
Car insurance excess is the amount you agree to pay towards a claim when you set your plan up. More often than not, you’ll only pay this when you’re found to be at fault, but sometimes you will have to pay it until a decision has been made about who the incident was caused by – you’ll get the amount refunded if it's discovered that the fault’s not yours.
As a general rule, the higher the excess, the lower the premium. If you find you’re someone who’s prone to getting higher quotes – for example, if you’re a new and a young driver – insurance brokers will often default your excess payment to be much higher than average to make your policy appear cheaper. While your premiums will be cheaper with a higher excess, you will need to pay out a significant amount if you make a claim.
Different types of car insurance excess
When taking out a car insurance policy, you’ll notice there are two kinds of car insurance excess involved. It’s important to know the difference between the two, and what influences their amounts:
Compulsory excess is set by the insurer – you can’t change it. They decide how much compulsory excess you should pay based on factors like your experience, age, car make and model, where you live and work, etc.
They consider how at risk you are of an accident, and how expensive your car will be to fix or replace, to determine how much you should put towards a claim.
Voluntary excess is an amount you literally volunteer to pay towards a claim – you can choose how low or high it is, or you can choose not to pay any at all. The more excess you volunteer to pay, the lower your premium will be – so it’s a good idea to increase this if you can afford it.
However, it’s very important you check the voluntary excess when you look for insurance quotes – some insurers will decide a high voluntary excess for you in order to make the premiums look cheaper. It’s up to you to check and adjust this before you agree to the terms of the plan.
What do I do if I can’t afford my excess?
When finding your policy, you really need to think about how much excess you can afford. Ideally, you should save up and put away the amount of excess you’ve agreed to pay just in case anything does happen.
If you’re going to find it hard to put away your excess amount all in one go, or keep it saved up, consider excess insurance. Excess insurance is an added extra a lot of the largest names in car insurance offer – it usually means you pay around £30 to £70 per year more on average, but your excess will be reimbursed if you have to pay it towards a claim.
However, if you have an accident but are experiencing financial difficulty there are a couple of things you can do – firstly, if you’re receiving a pay out, you should ask your insurer if they are able to deduct the excess amount from this. Otherwise, you can ask to pay your excess amount in instalments. Insurance companies aren’t obliged to do either but will often provide reasonable help in these situations – whenever you face financial difficulties, it’s best to pick up the phone and discuss your options.
There are plenty of places online to get more information about insurance. But if you need any help with buying a car, then please get in touch!