When Do You Pay Excess on Car Insurance?

If you’ve looked around for good car insurance, then you’ve probably heard insurers talking about compulsory and voluntary excess and how paying excess can lower your premiums.

But how does excess work, what is the difference between voluntary and compulsory excess, and most importantly, when do you pay excess on car insurance?

Let’s find out. 

What Is Excess on Car Insurance?

An excess on car insurance is a contribution you agree to pay on top of your traditional car insurance toward the cost of a claim. 

Essentially, you agree to pay a certain amount of money every time you make a claim on your own insurance.

How Does Car Insurance Excess Work? Car Insurance Excess Explained

An excess payment covers part of the full cost of repair in case of an accident that’s fully or partially your fault.

In most cases, you can have your excess payment insurance deducted from the total repair bill and pay it at the end of the claim process. Whether that’s an option depends on your insurance provider, your policy, and the circumstances surrounding the claim.

For example, if your excess is £500 and you had to make repairs to your car that cost £2,000, your insurer will pay the garage £1,500 and then you’d have to pay the remaining £500 directly to the garage.

Insurance providers offer excesses on car insurance because it reduces the number of low-value claims and helps deter fraud. Policyholders are less likely to make a bogus claim if they have to pay an excess. 

But, there’s a benefit for policyholders as well – paying excess on your insurance means cheaper insurance premiums. 

When Do You Pay Excess on Car Insurance?

Policyholders pay car insurance excess every time they make a claim. 

The claim triggers an investigation process into the accident that ultimately determines who was at fault. 

The excess is paid regardless of whether you’re at fault or not since it usually takes some time for the investigation to conclude and settle on a culprit. If it is determined that the accident wasn’t your fault, the excess will be refunded.

The excess amount on your car insurance (the amount you’re expected to pay) is set by the insurer when they offer you a quote. The total insurance excess fee also depends on the type of car insurance excess you agreed to pay for.

Do I pay excess on my car policy if only the other party claims? 

Since an insurance excess payment is an amount you pay toward your own claim (and repairs), you’re not required to pay an excess when another person makes a claim. 

If the other driver makes a claim and it is determined that the accident was your fault, your insurance provider will pay out. However, as a result, your premiums are likely to spike the following year because you’ll be considered more at risk of having another accident. 

What Are The Different Types Of Car Insurance Excess?

There are two types of car insurance excesses– compulsory and voluntary excess.

The difference between voluntary and compulsory excess is that the policyholder decides whether they want to pay for the former.

Compulsory excess

Compulsory excess car insurance is the amount you have to pay if you make a claim. 

The cost of the compulsory excess is determined by the insurer, meaning you have no control over how much it would cost. Insurers often calculate the amount based on the type of vehicle you drive, your age, and driving experience. 

For instance, if the accident resulted in £1,000 worth of damage to your car, and you agreed to a compulsory excess of £200, you’ll foot the first £200 of the bill and the remaining £800 will be covered by your insurer.

Voluntary excess

Voluntary excess on car insurance is the optional amount you pay on top of your compulsory excess. 

The amount is set by the policyholder, often when they take out the policy. 

For example, if you agreed to pay £100 in voluntary excess and the compulsory excess is £150, you’ll have to pay a total of £250 in excess on your car insurance when you make a claim.

Compulsory vs Voluntary Excess: Can You Change Your Compulsory and Voluntary Excess?

The difference between compulsory and voluntary excess is that the policyholder sets the amount of voluntary excess they want to pay in case of a claim. 

What’s more, the policyholder can change their voluntary excess whenever they want. They can decide to pay more or less than before or remove voluntary excess from the policy altogether.

On the other hand, compulsory excess is set by the insurer and is fixed– every time the policyholder makes a claim they would have to pay the amount they agreed to when they signed the policy. 

Should you increase your voluntary excess? 

If you consider yourself a safe driver, chances are you’ll likely save some money if you agree to an excess insurance policy. However, make sure that you can afford it in case of an accident.

What Happens if I Can’t Pay My Excess in the UK?

If you can’t afford your excess, your insurance provider will either offer you an alternative payment plan or refuse to process your claim.

What Is Excess Insurance?

Excess insurance is a type of insurance that covers the costs of the excess when the policyholder makes a claim. 

The insurance covers the costs up to a pre-agreed limit, which is set by the policyholder. 

Excess insurance only covers the compulsory excess. You would still need to pay the amount when you make the claim but you can then claim it back through your excess insurance provider.

Bottom Line 

An excess on car insurance is a contribution that you pay toward your claim. You only pay the excess when you’re making a claim, to cover the costs of any repairs or damages to your vehicle.

If you happen to have an excess insurance policy, you could claim your money back, but only for compulsory excess.