About excess levels
Now then, one aspect that you need to look at when taking out motor insurance is the level of excess that’s associated with the policy.
Firstly, let’s talk about what an excess is. It’s basically the amount that you’re expected to pay when you make a claim. So, if your total excess stands at £150 and you make a claim that would notionally cost £300, then you can only expect to receive £150 from your insurance company (that’s the cost of the total claim, minus your excess).
Things get slightly more confusing because there are usually two parts to your excess. These are the compulsory excess and the voluntary excess.
The compulsory excess is an amount that’s specified by your insurance company. You’ll be expected to pay this element of any claim that you make.
How about the voluntary excess? Well, as the name suggests, this is an element that you are volunteering to pay. That doesn’t mean that you can choose whether or not to contribute at the time of an accident or claim. But it does mean that you can opt to set this at a particular level when taking out the policy.
There’s basically a bit of a decision for you to make here. The lower the voluntary excess, the higher your car insurance premium.
So you could opt for a higher premium but know that you’ll actually have to spend less in the case of an accident, or other claim.
The alternative is to increase that voluntary excess level. That will mean that you’ll have to contribute more at the time of a claim, but it will also save you money in terms of your insurance premium. There’s no right answer really to this balancing act – it’s for you to decide what you feel most comfortable with.
You may also notice that there may be some other excesses mentioned on your policy. These are usually compulsory and may apply to specific drivers, or parts of your vehicle.
Typically, you may find that there’s a greater excess involved if the driver of your car, when involved in an accident, is under a certain age. This will often be a tiered excess. In other words, you may have to pay a higher excess if the driver is under the age of 25, but there could be an even greater excess if the driver is under the age of 21.
This is particularly important if you are intending on having named drivers on your policy. It’s something that can have a significant impact, especially for parents who choose to put their children on the policy and who allow their children to drive the car.
You may also face specific excesses relating to your car stereo, or replacing your windscreen.
Want to know what factors are important when it comes to choosing car insurance? Our complete set of articles can point you in the right direction:
Car insurance explained
Third party insurance
Third party fire and theft
Fully comprehensive cover
Comparing car insurance deals
The cost of car insurance
Car insurance costs: your car
Car insurance excess levels