Guide to Excess in Car Insurance

A Comprehensive Guide to Excess in Car Insurance

Excess in Car insurance is an important aspect of the car insurance industry that you must understand.

The ‘excess’ on your vehicle insurance is the amount you should pay if you claim after an accident.

Here’s our comprehensive guide to car insurance excess, covering everything from mandatory and voluntary coverage to what happens if you can’t pay.

Guide to Excess in Car Insurance
Credit: allianz.com.au

What is excess in car insurance?

A car insurance excess is the sum that a client must pay when they are at fault in a collision. This payment is a portion of your loss that is not covered by insurance and is due when you file an insurance claim. The garage handling your repair will typically receive payment for this excess.

Whatever the circumstances of the accident, this insurance excess must be paid. The insurance company makes this claim in an effort to discourage fictitious or dubious insurance claims as well as to reduce premium payments.

For instance, if your excess is £300 and the cost of the damages to your car is £1,000, you would pay £300, and your insurance company would cover £700. If your excess is £400, you will have to pay £400, and your insurance company will cover £600.

Different Types of Car Insurance Excess

There are two parts of your car insurance excess you’ll need to consider:

  • Compulsory excess: This is a set sum that an insurance provider or insurer determines based on a number of variables, such as the make and model of your car, your driving history, or your age. This excess is beyond your power to manage. For instance, a more expensive model of car would have a higher mandatory excess than one that is less expensive. Compulsory excess is decided by the insurer.
  • Voluntary excess: This sum is charged on top of the compulsory car excess when you make a claim. As the name implies, you can choose how much to pay as excess. You can reduce your premium by increasing your voluntary excess, but you must pay it when filing a claim. Paying a higher excess is a good option if you believe you are a safe driver. You can choose to increase or decrease the lot size based on your preferences. The individual chooses voluntary excess based on what they could afford to pay if they claimed

The total excess you pay is the sum of the mandatory and voluntary excess.

If your mandatory excess is £150 and you choose a voluntary excess of £100, your total excess is £250. You must pay a total of £250 towards the cost of filing a claim.

You only pay the excess if you have losses and are at fault. For example, if you cause an accident and damage your car.

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Why do you need to pay excess in Car Insurance?

The car insurance excess covers the cost of replacing and repairing insured vehicles, which keeps policies affordable. It also helps to keep people from claiming too frequently and for trivial reasons. In that sense, excess allows the insurer to insure your car.

What factors contribute to car excess amounts?

  • Age.

An additional excess might be charged if the car’s driver was under 25 years old when an accident happened.

  • Basic.

This is the standard amount that a customer may be required to contribute to each claim. It is determined by the customer’s location, the type of vehicle they drive, the type of policy purchased, and the policy owner’s claim history.

The Basic excess may include both a Basic excess and an Imposed excess, depending on our risk and underwriting criteria. If an imposed excess is used, it will be listed separately on the policy schedule.

  • Driver history.

If the customer has a poor driving record, such as having their license suspended or canceled, this excess may apply if they were driving at the time of the incident.

  • Undeclared young driver.

Assume a customer filed a claim for an incident in which their vehicle was driven by a driver under the age of 25 who was not on the policy schedule. This excess may be paid in addition to the Basic and Age excess in that case.

  • Inexperienced driver.

If the customer’s license was less than two years at the time of the incident, they might be required to pay an additional excess.

  • Voluntary.

Customers can choose to pay a higher basic excess in order to lower their insurance premiums. This option, of course, means a higher excess payment if they file a claim.

How does excess in car insurance work?

The amount you spend on repairs for your car is called excess. When you purchase a policy, you and the insurer will decide on this sum. Consider that you have a £100 agreed-upon excess to pay. Your car was hurt in an accident and fixing it will cost you £500. The insurer will cover the remaining £400 after receiving your payment of £100.

Conclusion

You can reduce your premium by selecting a higher voluntary excess, but you will have to pay more if you make a claim. If you pick a lower voluntary excess, your premium may increase because your insurer will have to pay more if you file a claim.