Car insurance excess: you may have probably heard of this term through a news report or online forums due to various stories of traffic accidents and unforeseen circumstances. While the term may be thrown around quite frequently, most people are still unfamiliar with how car insurance excess works exactly and what they can do with it. 

To better understand what goes on with car insurance excess, let’s go over every question that you might possibly have about it.

First things first, what is car insurance excess?

Car insurance excess, to put it simply, is the total amount that you pay (or what is held back by your insurance provider) during any situation that requires you to claim your policy. Instances of car insurance excess generally take place regardless of whether or not which party at fault has been established. 

The total amount of your car insurance excess may vary depending on several factors, namely: 

  • The type of car that you have
  • The age and experience of the drivers involved in your insurance policy
  • Whether or not you’ve opted to take a protected or guaranteed No Claims Bonus (which involves having a greater level of control over the cost of your insurance)

Why is it important to have your car insurance excess?

Car insurance excess provides a certain level of protection that deters the other party in any car accident from making excessive claims over minimal damage. It may seem small at first glance but can lead to a greater financial burden when all the numbers add up. 

How does car insurance excess work exactly?

Let’s say that you, unfortunately, got into an accident wherein the total cost of repair is £5,200. Fortunately, you have an insurance plan that has a £200 excess, which you acquired a few years back.

In this case, the car insurance excess basically works in a way that allows it to cover the costs of repair up to £5,000. This essentially leaves you with only £200 to pay before the bill is paid in full since you got a £200 car insurance excess. Car insurance excess is mainly used for providing extensive financial assistance, which has been shown in the above example as the policy took care of the £5,000 as opposed to the policyholder paying the entire amount. 

Are there different types of car insurance excess?

Yes, there are actually two types of car insurance excess policies, namely: compulsory and voluntary. Here’s a quick definition for compulsory and voluntary car insurance excess policies: 

  • Compulsory excess: This type of car insurance excess policy, in essence, is a fixed amount that you must have to pay in cases wherein you may have to make a claim, and the amount payable is set by your insurance provider. Compulsory excess is particularly harder on new drivers simply because insurance providers see them as higher risk cases. The same case goes for policyholders that have higher-value cars.
  • Voluntary excess: Typically used as an add-on to a compulsory car insurance excess policy, voluntary excess allows a policyholder to choose exactly how much voluntary excess they like to pay. Increasing your total amount of voluntary excess can help with bringing your insurance premium down, but it is important to note that you’ll have to pay that amount when you make a claim. 

The takeaway

Car insurance excess is a great way to ensure that you stay as safe as possible in regards to your finances when you get into an unfortunate vehicle accident. If you’re looking to claim your car excess for free, contact Accident Management Company today to see how we can help.