What is excess in vehicle insurance?
In the world of Vehicle insurance policy, the term excess refers to the upfront cost you’re liable to pay when making a claim, irrespective of who was at fault at the time of the accident. This sum is a predetermined sum set out in your insurance policy and is essentially a means of sharing the risk between you and the insurance company.
There are two types of excess:
- Compulsory Excess: This is a fixed cost set by your insurance based on the risk they consider you to pose, like age, driving history, type of vehicle, etc.
- Voluntary Excess: This is a sum you choose to pay in addition to the compulsory excess amount. Opting for a higher voluntary excess can reduce your insurance premium, but it also means you will pay more if you make a claim.
Why do we have vehicle insurance excess?
Car insurance excesses warn people from making lots of compensation claims for minor damage.
By decreasing low-value claims, it helps to keep the cost of insurance down for everyone. Insurance is there for the claims you cannot be able to pay yourself.
How does vehicle insurance excess work?
Your total excess can be calculated by adding the compulsory excess and voluntary excess amounts together.
We can understand it with an example, if your insurance policy has a compulsory excess of £50 and you add a voluntary excess of £250, you will need to pay £300 if you claim. If you were claiming £1,000, your insurance provider would pay the remaining £700 (£1,000 – £300).
You may have to pay the excess to start a claim, or the excess may be deducted from the repair compensation at the time of settlement.
- Already insured: You can find out how much your excess is by reviewing your policy documents or by contacting your insurance to find out.
- Looking for insurance cover: If you are applying for a new insurance policy, make sure you check the compulsory excess before you decide to add a voluntary amount to your insurance cover.
Compulsory excess
Compulsory excess is a fixed amount you have to pay if you are looking to make a claim. Your insurance company sets the amount.
The figure can differ depending on your driving experience, age, and the type of vehicle. A new driver might have to pay a higher compulsory excess than an experienced driver as they are viewed as a higher risk.
On the other side, expensive performance cars could have a higher compulsory excess than a standard make and model vehicle.
Voluntary excess
The voluntary excess is added to the compulsory excess; these figures together are the total amount you will have to pay if you file a claim. But as the name shows, you can choose how much voluntary excess you want to pay.
For example, if you have a compulsory excess of £150 and you set your voluntary excess at £50, you will pay £200 in total if you need to make a claim.
The higher your voluntary excess is, the lower your payments will be. When choosing your voluntary excess, you need to verify that it’s a price you can actually afford if you need to make a claim. Lower excess, higher insurance premium or higher excess, lower premium? It all depends on you.
Total Excess on Car Insurance
Total excess is the combined sum of compulsory excess and voluntary excess that you will need to pay towards any claim you make during your active policy duration. This amount will change depending on the policy and your insurance provider. Suppose you are finding that the total excess for car insurance is high and beyond what you can afford in an unpredicted situation. In that case, look at the voluntary excess and lower it to a level you can afford. This may increase your overall insurance premium.
When do you pay excess on car insurance?
You pay the excess amount in the circumstances of any claim made on your insurance policy, regardless of who is at fault. However, if the accident was the other driver’s fault and their insurance recovers the full cost, you may be able to get this amount. You should review what your vehicle insurance policy covers you and the excess you will need to pay.
Paying excess for a non-fault accident
When you pay the excess for a non-fault car accident, you may need to claim this back from the insurance company of the driver who is liable for the accident once the claim is settled if you do not have legal cost cover to pay this for you. If you have trouble recovering your cost back, you can contact a solicitor and take the insurance company or driver to court.
If your insurance company has dealt with the claim, they should recover the excess for you. If you have a non-fault accident, a credit hire company can also claim on your behalf to recover costs and excess.
Understanding Fault and Excess Payment
Now, taking a deeper look, the amount of excess is required when you make a claim, regardless of fault. However, fault decision plays an important role in whether you can recover this excess:
At-Fault vs. Non-Fault Accidents
An at-fault accident refers to a scenario where you are liable for the accident. In such cases, you will have to bear the excess, and it’s unlikely you’ll recover it.
Conversely, with a non-fault accident, another driver is liable. You might still have to pay the excess amount when claiming; however, if the third-party insurance admits liability, your insurance will often try to cover the costs, including your excess, from the third party’s insurers.
Paying Excess for Non-Fault
It might seem unfair to bear the upfront excess amount when you’re not the faulty driver, yet this expedites your claim process: by paying your excess, you enable repairs to begin without waiting for fault disputes to settle. This is beneficial when the other driver’s insurer is slow to accept liability or if there is difficulty proving fault.
Recovering Excess Amount
Once liability is established, that you were not at fault, your insurance will step into the shoes of the subrogation process.
Your insurers will pursue the third-party insurance to recover the cost paid, including your excess. This is a procedure where insurance fights it out behind the scenes. If you win, you will be refunded your excess.
Direct Claims: If your insurance is slow in recovering your excess, you can directly claim from the third-party insurance.
Availing Legal Avenues: In cases where the third-party insurance denies liability or their policyholder is unresponsive, considering legal support might be your best recourse, especially if a significant amount is at risk.
We do not charge you an excess amount
When claiming with an accident management company, you do not pay an excess amount. This is one of the reasons why hundreds of drivers every year choose Accident Claims Assist.
We claim directly against the faulty driver instead of claiming your insurance policy; we claim directly against the other driver’s insurance policy. This avoids having to pay your excess.
