When to Pay Excess on Car Insurance & Does Insurance Excess Work?

September 27, 2023

Perhaps the last thing you want to find out after a car collision or a road incident is that your premium doesn’t cover the repairs or the excess in your insurance policy is higher than you initially thought.
Drivers are expected to pay several kinds of excess, and the total price of this additional payment is not always clear, especially if a policyholder doesn’t know how significant their compulsory excess is. 
But how exactly do you pay your excess? Standard insurance excess is the total sum you must pay upon filing an insurance claim. While the standard payment is straightforward, there are other added costs to your car insurance policy.

How Do You Pay an Insurance Excess?

But let’s assume you had a minor car accident or road incident that involved a third party. What is a standard course of action in that case?
Typically, the insurer covers the balance of everything left after paying the excess to settle the repair bill. For instance, if you file a claim for $1200, your voluntary (minimum) excess payment is $450. In this case, you will be expected to pay $450 for the loss to the insurance company, while the insurer will cover the rest of the repair bill, which is $750.
Choosing to pay a higher excess payment could bring down the cost of the premiums. Nonetheless, keeping the minimum excess low is advisable if you are not ready to pay the excess in full or cannot afford it.

How Does Insurance Excess Work?

Paying more on car insurance is nothing new for drivers, especially when it concerns their safety. Nevertheless, auto insurance excess is always a voluntary sum paid by a driver.

Voluntary excess meaning (also known as Flexi-premium or a minimum excess in some countries) is the amount of money you agree to pay when you file a claim.
If there were no excess set, it would potentially encourage some drivers to claim every time any minor damage is inflicted. The insurance company usually sets the excess as a minimum amount that drivers must pay every time a claim is made. Likewise, even if you are not driving a car you have insured, you would still have to pay the excess in case of a car collision or a road incident.

Compulsory and Voluntary Excess Difference

The standard or a voluntary excess is paid in case any claim is filed. Minimum excess is another term that insurance professionals and policyholders refer to as excess. In simple terms, the standard excess is the out-of-pocket sum you must pay if you file a claim with the insurer.

Source: Stoneacre

The compulsory excess, on the other hand, is the sum that the insurer sets. By and large, this type of auto insurance excess is always the same and can’t be changed by the policyholder. The carrier sets the value of the compulsory payment on its own based on various factors that range from your driving experience and age to the type of car you’re insuring.

Aspects Affecting the Excess Value

Some insurance providers can charge extra on the excess, and it is crucial to examine how big the minimum payment will be for each policy. For example, this can happen in the following cases:

  • The driver has no prior insurance history.
  • A person that was driving the car has only a learner’s permit.
  • A claim occurs during the first 3 months of cover or earlier.
  • In case the same type of incident happens within a year.
  • Driver obtained their driver’s less than 2 years ago.
  • The driver involved in the incident is not the regular driver (not the one listed in the insurance certificate)
  • The driver is under a specified age (younger than 21)
  • There is no third party involved in the incident.


Above are just a few examples of what can affect the excess price. However, these factors can vary from state to state or depending on the insurance carrier.

What Is Total Excess in Car Insurance?

As all drivers are required to be adequately insured to use specific vehicles, sometimes t can be difficult to find cover or policy that enables you to hop in a car and drive it without adjusting the existing annual policy beforehand.
When a claim is filed, you must pay compulsory and voluntary excesses as a car owner, which determines your total excess payment.
One of the main components of your car that can affect your policy price is the engine. Hence, the motor’s power and fuel displacement rate is the primary parameter for calculating the total excess.
Liability coverage is yet another type of protection included within a renters policy. So naturally, it is an excellent option in a renter’s coverage since it can help when you need to pay excess on third-party claims.
Although liability coverage is mandatory for every insurance policy in case of total excess, collision and comprehensive coverage are often optional.
Additionally, you might pay a higher excess if your vehicle has a powerful engine. Due to some cars’ performance nature, the additional excess could be higher than road models.
As a rule of thumb, the bigger your car’s engine is, the more significant the excess payment will be. However, the sum can range regardless of how big your vehicle is.

What if a Car Doesn’t Have an Engine?

Most electric cars don’t have an internal combustion engine but an electric motor. Moreover, electric car engines are powered by batteries, which need to be charged. The good thing about owning an electric car is that insurance carriers often offer a lesser excess than on regular vehicles.

Alternatively, your excess can be affected by the following factors:

  • Insurance carrier: Undoubtedly, a big factor that decides how significant an excess payment on your car will be is how your insurer evaluates it. But, chances are, you might still get a better deal if you shop around for a policy from several providers.
  • Your age: As obvious as it may sound, young drivers have less driving experience. Moreover, people younger than 21 are more likely to be involved in an accident after passing their test than more experienced drivers that are older. In addition, the average claim value made by younger drivers is higher than the claims made by older drivers.
  • Car: Another critical point to consider is the car you are insuring. If you drive a brand-new expensive car, chances are you will get a higher excess than an older, low-performance vehicle that is cheaper to maintain and repair.
  • Postcode: The area where you live and getting your policy can play a role in determining the value of the excess. For instance, if you live in an area with frequent car crashes, it will affect the sum you will need to pay for excess in case of an accident.

Some aspects of excess payments may differ from country to country, be it the United States or the United Kingdom. Hence, as we mentioned above, it is essential to study all the caveats of your policy, and what it covers so you can still pay the excess if an incident happens. As a rule, you will know your excess price once you get a car insurance quote.

When Is It Best To Increase a Voluntary Excess?

In some cases, increasing the voluntary excess might seem like a good idea. For example, a more extensive package means better coverage in case of an accident and gives you more options for fixing your vehicle.
It is important to remember, though, that you’re in control of minimum excess, which allows you to pick the sum that suits your budget and needs. However, if you decide to raise your voluntary excess to keep your policy costs down, ensure that you can still afford to pay it if anything happens to your car.

Who Pays the Excess if It’s Not Clear Whose Fault It Is?

In most cases, an excess payment is not due if you do not cause the incident. That said, the policies can differ from carrier to carrier, so it’s essential to check any formalities to be sure.
Some insurance providers offer comprehensive coverage as a standard package. It is worth noting, though, that if it is not clear whose fault it is, you won’t be able to claim on third-party insurance. If the other vehicle involved in the accident happens to be uninsured, you won’t need to pay the excess. Moreover, some carriers allow you to save claims and discounts on insurance if you are going for a no-claim bonus.
renta a car insurance

Other Types of Insurance That Affect Excess Costs

Even though we have covered the main factors that can make the excess higher than usual, it is also worth noting that other kinds of insurance may determine its amount. These are not necessarily associated with auto insurance but still can influence the excess payment on the car you’re insuring.

Tenants Insurance

If you happen to file a tenants insurance claim, the sum you will have to pay in the end will depend on the extent of the damage to the property. 
On top of that, tenants insurance can cover your belongings from theft, including your car. Tenants policies can extend to your vehicle as long as it is stored in a locked garage. Although some policy requirements may differ, insurance providers often have specific rules on vehicle storage concerning tenant insurance.

Car Rental Insurance

Like car-sharing, car rental agencies have minimal coverage on their vehicles. Although insuring a rental car is necessary for some drivers, that may seem like a redundant expense for others. Luckily, most common insurance policies extend to rental cars as well.

Car Sharing Insurance

More often than not, car-sharing companies provide their customers with policies that protect the owner, renters, and other third parties involved in the rental process. That said, sometimes, the coverage doesn’t extend to the unlisted drivers in the policy or insurance certificate.

Bottom Line

Ultimately, you want coverage that protects your car and won’t make your wallet thinner at the same time. So with that in mind, don’t hesitate and shop around. In the end, you can find a better deal for yourself and your vehicle upon selecting your following auto insurance policy.

Marian Sahakyan

Marian Sahakyan is a content writer and a journalism graduate from California State University, Long Beach with a background in marketing as well as UI and UX design. Marian’s previous writing and reporting has been featured in several community newspapers throughout Southern California.