What is a car insurance policy excess?

The excess is a sum of money that you will be expected to pay towards any claim you make against your policy for losses that you incur yourself. This normally includes the cost of any repairs to your own car or any other property you own which is damaged or lost as a result of accident, fire damage or theft.

Do I have to pay an excess if someone claims against my policy?

No. If you have an accident for which you are judged to be at fault the cost of third-party repairs or injuries are met by your insurance company and you do not usually have to make any contribution towards these at all. So, if a driver makes a claim against you, and your insurer agrees to meet that claim, you will not be called on to pay any excess.

Why is there a voluntary and a compulsory excess?

In order to cut down small claims, which can often cost more to process than they are worth, insurers usually insist on a compulsory excess on all policies apart from third party only ones. In addition they offer the possibility to the motorist of increasing this excess with a voluntary one. It is usual for the insurer to offer a premium reduction to those who accept this, and how much the premium reduces by depends upon just how substantial the voluntary payment is.

In the event of a claim the insured person would be expected to pay both the voluntary and compulsory excesses.

Do I have to pay an excess even if the other side is at fault?

If it is proven that another driver was responsible for an accident your insurance company would normally reclaim your excess from that person's insurer and reimburse you.

How much do accidents actually cost?

Surveys amongst drivers who have paid for their own repairs after an accident indicate that on average they cost them less than £500. This is an average only of course and individual costs can vary considerably. However this means that very often an average bump can cost less to repair than the total excess that the car owner has to pay if a claim is made against the insurance company.

Is it worth my while offering a large voluntary excess?

Possibly; you need to balance the chance of paying out a larger sum yourself in the event of an accident against paying a lower premium, bearing in mind that the cost of a claim could be far higher than you expect. Whatever total payment you offer (ie compulsory + voluntary), do make sure that it is a sum that you can afford.

A good price comparison site will allow you to experiment with different voluntary excesses so you can see what effect they have on premiums.

Do I have to report every accident to my insurers?

Where damage is light it can be tempting for drivers to pay for repairs themselves since, even ignoring the question of which one was at fault, they may both have to pay their agreed excesses, at least initially. It is also likely that premiums for both parties will increase in future because insurers believe that any accident you have, whether you were at fault or not, increases the possibility that you will have other, possibly more serious, ones in the future.

It is important to remember though that you are under an obligation to inform your insurers of any accident that you are involved in, whether you make a claim are not. Failing to do so can invalidate a policy in the future and could even be considered fraudulent.