What Is Car Insurance Excess?
Car insurance excess is the amount you agree to pay out of your pocket when making an insurance claim. It’s a fixed contribution that comes before your insurer pays the rest of the cost. In the UK, this is a standard feature of nearly all car insurance policies and helps manage risk for insurers while keeping premiums balanced.
Why Does Excess Exist?
Excess acts as a financial safeguard for insurers. Without it, policyholders might make frequent small claims that would be costly to process and settle. By requiring drivers to contribute a set amount towards each claim, insurers reduce the likelihood of minor or frivolous claims.
Example: If your car needs £1,000 worth of repairs and your excess is £250, you’ll pay £250, and the insurer pays the remaining £750.
2. The Two Types of Car Insurance Excess in the UK: Voluntary vs. Compulsory
Understanding the difference between voluntary and compulsory excess is key to managing your car insurance policy effectively in the UK. Both types contribute to the total excess amount you’ll pay if you make a claim, but they function quite differently.
What Is Compulsory Excess?
Compulsory excess is the mandatory amount set by your insurer. You don’t choose it—your insurer decides based on your risk profile, driving history, age, car type, and more.
Example: New or young drivers may have a compulsory excess of £350, while more experienced drivers might have £150–£250.
This part of your total excess cannot be negotiated. If you make a claim, you must pay this amount before your insurer covers the rest.
What Is Voluntary Excess?
Voluntary excess is the additional amount you choose to pay on top of the compulsory excess. It’s entirely optional—but comes with trade-offs.
Opting for a higher voluntary excess can reduce your insurance premium, because you’re agreeing to take on more of the financial risk in the event of a claim. However, setting it too high could backfire if you can’t afford it later.
Tip: Most UK insurers allow you to choose a voluntary excess between £0 and £1,000.
Total Excess = Compulsory + Voluntary
If you make a claim, the total excess is the sum of both compulsory and voluntary amounts.
Example:
- Compulsory excess = £250
- Voluntary excess = £200
- Total excess you pay = £450
3. How Car Insurance Excess Affects Your Premium in the UK
One of the most direct ways to influence your car insurance premium is by adjusting your voluntary excess. Insurers in the UK use this figure, along with your risk profile, to determine how much you’ll pay annually. But while increasing your excess can reduce your premium, it doesn’t always mean you’ll save money in the long run.
When you agree to pay a higher voluntary excess, insurers see you as a lower financial risk. You’re essentially telling them: “I won’t claim for minor incidents.” As a result, they often reward that with a lower monthly or annual premium.
Stat Insight: According to data from Comparethemarket (2023), increasing your voluntary excess from £250 to £500 can lower your annual premium by 5% to 10%, depending on your insurer and risk profile.
While a higher excess might reduce your premium, it can become a financial burden during a claim. For example, if you’ve chosen a voluntary excess of £500 and have a compulsory excess of £300, you’ll need to pay £800 out-of-pocket before your insurer contributes anything.
Common Mistake: Many UK drivers overestimate how much they can pay in a crisis, just to lower their premiums a bit. This can lead to people delaying claims or being unable to repair their car after an accident.
4. The Risks of Setting Your Excess Too High
Choosing a high voluntary excess to reduce your car insurance premium may seem like a smart financial move, but it comes with serious risks. Many UK drivers don’t fully consider how that decision can impact them when it’s time to make a claim.
One of the biggest dangers of setting your excess too high is that you may not be able to afford it when it matters most. If your total excess is £800 and your repair bill is £1,000, you’ll need to pay £800 upfront, which could be a financial strain or outright unaffordable.
Example:
After a minor accident, repairs are quoted at £950. If your total excess is £900, the insurer only covers £50. In this case, many drivers end up paying everything out-of-pocket and not bothering to claim.
High excess levels can deter you from making claims, especially for moderate repair costs. While this might seem like it preserves your no-claims bonus, it could also mean you’re paying for a policy you don’t use.
Real-World Scenario (UK): A cracked windscreen or bumper scuff worth £300–£400 may not be worth claiming if your excess is £500. You essentially become your own insurer for anything under that threshold.
5. Real-Life Examples of How Car Insurance Excess Works in the UK
Understanding car insurance excess is much easier when you see how it plays out in real-world situations. Here are clear, practical examples to show you exactly how excess affects claims and payouts in the UK.
Let’s say you reverse into a bollard and cause £600 worth of damage to your car.
Your policy includes:
- Compulsory excess: £200
- Voluntary excess: £300
- Total excess: £500
In this case, your insurer only pays £100. You’ll need to pay £500 of the total repair bill.
This is a typical situation where many drivers choose not to claim, because it may not be worth using their insurance.
Now consider a more serious accident where the damage totals £3,000.
- Compulsory excess: £250
- Voluntary excess: £250
- Total excess: £500
Your insurer will pay £2,500, while you cover the first £500.
In this case, making a claim makes financial sense. The excess is a small portion of the total cost, and your policy delivers real value.
now Let’s say your total excess is £750, and you file a claim for £700 in damage.
In this case:
The claim would be rejected or result in no payout, because the repair cost doesn’t exceed your total excess. You would still be out of pocket and lose any no-claims bonus if the claim is recorded.
6. What Happens If You Can’t Pay Your Car Insurance Excess in the UK?
Car insurance excess isn’t just a formality; it’s a legal and financial obligation. If you’re involved in an accident and you can’t afford to pay your excess, you may face delays in repairs, issues with your claim, or, in some cases, be denied service altogether.
In the UK, insurers typically require the excess to be paid before repairs are authorised, especially when you’re using one of their approved garages.
Important: If you can’t pay the excess, your car might remain unrepaired, and your claim may be stalled or denied depending on the terms of your policy.
For many UK drivers, an unexpected claim comes at the worst possible time. If your total excess is £600 and you don’t have that available immediately, you may be left with an undrivable car and no payout, despite being fully insured.
Stat Insight: In a 2023 GoCompare study, nearly 1 in 5 drivers said they wouldn’t be able to afford their car insurance excess in the event of an accident.
If you’re concerned about affordability, some UK insurers offer Excess Protection Cover. This is an optional add-on that reimburses you for your excess (in part or in full) after a successful claim.
Example: If your policy has a £500 excess and you’ve bought excess protection, the insurer reimburses that £500 after your claim is settled, making your excess effectively £0.
7. Fault vs Non-Fault Claims and How Excess Is Handled in the UK
One of the most misunderstood aspects of car insurance excess in the UK is how it applies in fault and non-fault claims. Many drivers assume they’ll only pay excess if they’re at fault, but that’s not always the case, especially when claims get complex.
Fault Claims – You Always Pay the Excess
If you’re deemed at fault, either due to your actions or because the other party can’t be identified, you must pay your excess.
Example: You rear-end another car, and the repairs total £2,500. With a total excess of £400, you’ll pay that amount, and your insurer covers the rest.
Non-Fault Claims – You Still Pay Upfront (Sometimes)
Even if the accident isn’t your fault, you may still need to pay the excess upfront. The good news is, if your insurer recovers costs from the at-fault party (or their insurer), your excess may be reimbursed.
Real-World Example: Someone crashes into your parked car. You pay your £300 excess for repairs. A few weeks later, your insurer recovers costs from the third party and refunds your excess.
There are scenarios where you won’t get your excess back, even in a non-fault claim:
- If the other driver is uninsured
- If their insurer disputes liability
- If you lack legal protection and can’t pursue a claim
This is why some drivers in the UK choose to add Legal Expenses Cover to help recover losses after non-fault accidents.
8. How to Choose the Right Car Insurance Excess Amount for You
Choosing the right excess level isn’t just about lowering your premium — it’s about balancing affordability, risk, and value. For UK drivers, this decision can significantly affect your ability to claim and how useful your policy really is.
Start with What You Can Afford in an Emergency
Most UK insurers allow you to adjust your voluntary excess when getting a quote. Use this to your advantage by:
- Checking how much you save by increasing your excess in £100 increments
- Comparing at least 3–5 excess levels to find the best value
Insight: A study from MoneySuperMarket (2023) showed that raising voluntary excess from £250 to £500 saved drivers an average of 6.2% on their annual premiums.
Start with What You Can Afford in an Emergency
Your voluntary excess should reflect what you can realistically pay out-of-pocket in the event of an unexpected claim. If you don’t have quick access to £500 or more, choosing a high voluntary excess could leave you stranded.
Tip: Always base your voluntary excess on your savings buffer, not on the promise of lower premiums.
Consider Your Driving Risk and Vehicle Value
If you drive frequently, in high-traffic areas, or own a newer car, you may be more likely to claim, so a lower excess could be safer. On the other hand, if you’re an occasional driver with a cheaper vehicle, a higher excess might make financial sense.
Example: A driver with a £1,000 car might opt for a higher excess, knowing they’re unlikely to claim unless the damage is severe.
9. Do All UK Car Insurance Policies Include Excess?
Yes, every UK car insurance policy includes an excess, but the type and amount can vary depending on your provider, policy level, and even your driving history. Understanding what’s included can help you avoid surprises when it’s time to make a claim.
Every UK car insurance policy has a compulsory excess. This is set by the insurer and is non-negotiable. It’s based on factors like:
- Your age (young drivers often have higher compulsory excess)
- Driving experience
- Vehicle type
Example: Drivers under 25 may face a compulsory excess of £300–£500 due to higher perceived risk.
Voluntary excess is the amount you choose to pay on top of the compulsory excess. This is optional, but it can lower your premium if you’re willing to shoulder more of the risk.
Tip: While adding voluntary excess can reduce premiums, it’s important to weigh against the real cost of claims.
Other Types of Excess You Might See
Some UK policies include specific excesses for:
- Windscreen claims
- Theft or fire
- Drivers not named on the policy
These may be listed separately in your policy documents and apply under specific conditions.
10. Final Thoughts – Making the Right Decision About Car Insurance Excess
Understanding how car insurance excess works in the UK isn’t just for policy nerds; it’s essential knowledge for any responsible driver. Choosing the right excess can save you money in the long run and reduce the stress of making a claim.
Don’t just renew your car insurance blindly. Each year, reassess your:
- Financial situation
- Driving habits
- Willingness to take on risk
Use comparison tools to explore how adjusting your voluntary excess impacts your premium and claim process.
A lower premium might look appealing, but if it comes with a £1,000 excess you can’t afford in an emergency, it may not be the right policy. Choose a policy that offers a reasonable premium with a manageable excess that’s true value.
Keep your excess amount saved or easily accessible in case of a claim. Also, understand when and how it applies, especially in fault vs. non-fault situations. If necessary, consider add-ons like:
- Legal Expenses Cover
- Excess Protection Cover
These can offer additional peace of mind and financial protection.