Car insurance excess explained
Your car insurance excess is the amount you contribute towards the cost of a claim before your insurer pays the remainder. It only applies to claims where you are at fault or where fault cannot be established. Getting the balance right between your excess and your premium can save you money - but setting it too high can leave you worse off when you need to claim. Here is how it works.
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What is car insurance excess?
Excess is a pre-agreed contribution you make towards the cost of any claim you make on your policy. If you claim for damage worth £1,000 and your total excess is £400, your insurer pays £600 and you pay £400.
Excess applies to your own claims, not to third-party claims. If another driver claims against your policy for damage you caused to their vehicle, your excess does not reduce their payout.
Compulsory excess
Compulsory excess is set by your insurer and is non-negotiable. The insurer sets it based on factors including your age, the car's insurance group, your driving history, and the level of cover you have chosen.
You cannot reduce compulsory excess by any means other than switching to a different insurer who sets a lower amount for your risk profile. It is applied first and cannot be offset by any other policy feature. Compulsory excess varies significantly between insurers for the same driver and vehicle - comparing quotes is the only way to find a lower figure.
Voluntary excess
Voluntary excess is an additional amount you choose to add on top of your compulsory excess. The benefit is a reduced premium - insurers offer a discount because a higher excess means smaller claims are absorbed by the policyholder rather than the insurer. The trade-off is that your total out-of-pocket cost on any claim is higher.
For example, if your compulsory excess is £200 and you add £300 voluntary excess, your total excess is £500. Reducing the premium by £80 per year looks attractive until you need to claim and find yourself contributing £500. The maths needs to be checked honestly rather than focusing only on the premium saving.
How to set your voluntary excess
The right level of voluntary excess depends on your savings position and how you assess your risk of claiming. A useful test: could you comfortably pay your total proposed excess from savings without significant financial pressure? If not, you have set it too high. An excess that looks attractive on a quote comparison can become a financial problem at the worst moment.
Consider also the value of your car. If your car is worth £2,500 and your total excess is £1,500, any claim for damage under £1,500 is not worth making - you would pay the full cost yourself and still potentially trigger a no-claims bonus reduction. A total excess greater than around 30 to 40% of your car's market value makes the own-damage element of a comprehensive policy largely notional.
Does excess apply to all types of claim?
Not always. The excess structure set out in your policy schedule shows which excesses apply to which events. Fire and theft claims may carry a different compulsory excess from accidental damage. Windscreen claims typically have their own lower excess - often £75 to £100 with most comprehensive policies, sometimes waived entirely for repair rather than replacement.
Third-party only policies do not include own-damage cover at all, so excess is not relevant to claims on your own vehicle - there is nothing to claim on. The excess question matters primarily for comprehensive policyholders.
Excess and no-claims bonus
Making a claim - even one where you pay the full excess and the insurer contributes nothing - can still trigger a no-claims bonus adjustment on some policies, because the claim is recorded in your claims history regardless of the payout amount. Some policies include no-claims bonus protection as an add-on, which allows a set number of claims without reducing the discount.
How no-claims discounts work explains the full mechanics of NCB protection and what actually happens to your discount after different types of claim.
Excess protection
Excess protection insurance is a separate add-on policy that reimburses your car insurance excess when you make a claim on your main policy. You still pay the excess upfront to your main insurer when you claim - excess protection then repays that amount to you once you submit proof of the original claim and payment.
This matters most because compulsory and voluntary excess combine. A driver with a £300 compulsory excess and a £200 voluntary excess faces a £500 payment before their insurer covers anything on an at-fault claim. Excess protection is designed to remove that financial exposure.
How it works in practice
The process runs in two stages. First, you make a claim on your main car insurance and pay the full combined excess to your insurer as normal. Second, you submit a separate claim to your excess protection provider with evidence of the original claim and the excess payment. The excess protection policy then reimburses you up to its stated maximum per claim.
The key point is that excess protection does not reduce what you pay your main insurer - it recovers the payment for you after the fact.
When does excess protection make sense?
The strongest case for excess protection is when your total excess is high enough that a single claim would cause real financial inconvenience. Drivers who have added a substantial voluntary excess to bring their premium down are exactly the group who benefit most: the saving on the premium is offset by the risk of a large outlay if they claim, and an excess protection policy bridges that gap at a relatively low annual cost.
If your total excess is low, the case is weaker. Weigh the annual premium against the realistic reimbursement amount and how often you would expect to claim. The maths tends to favour excess protection most clearly when combined excesses run into several hundred pounds.
Excess on temporary car insurance
Temporary car insurance policies carry their own excess, set separately from any annual policy on another vehicle. If you are borrowing someone else's car and take out temporary cover, any claim runs through the temporary policy's excess, not the car owner's annual excess - meaning their no-claims bonus is not affected. Excess levels on temporary policies vary between providers and cover levels, so check the policy schedule before buying.
Frequently asked questions
What is car insurance excess?
The amount you contribute towards the cost of a claim before your insurer pays the rest. If your excess is £500 and the claim is for £5,000, you pay £500 and your insurer pays £4,500.
What is the difference between compulsory and voluntary excess?
Compulsory excess is set by the insurer and cannot be changed. Voluntary excess is an additional amount you choose to add. Your total excess is both added together.
Does excess apply if someone else claims against my policy?
No. Excess only applies to your own claims. Third-party claims against your policy are not affected by your excess.
How does voluntary excess affect my premium?
Adding voluntary excess reduces your premium because it reduces the insurer's exposure on smaller claims. The higher the voluntary excess, the larger the discount - but the more you pay out of pocket if you claim.
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