We all know that vehicle insurance is a legal requirement for anyone who wishes to drive on public highways in the UK, however, it is surprising just how many drivers are unaware that their insurance policy will probably include an insurance excess – and even amongst those who do know about it, there is a huge percentage of people who do not know what it is or understand how it works.
Our guide to the insurance excess part of your car insurance policy will explain what it is and help you to understand how it works.
Why is Vehicle Insurance Excess required?
Vehicle insurance excess was introduced by insurers in order to help prevent fraud and with the aim of cutting down on the volume of low value insurance claims. The vehicle insurance excess part of an insurance policy helps to ensure that any claimant is more likely to be a genuine claimant and not a fraudster, because of this, insurance excesses actually help to keep the cost of insurance down for us all.
Vehicle insurance excess works in exactly the same way as an insurance excess would for a home insurance policy, mobile phone insurance policy or other types of insurance policies, such as health or travel insurance. The insurance excess is basically an amount that you must pay when you make a claim on your insurance. The amount of vehicle insurance excess is pre-agreed when you take out your insurance policy, so it is extremely important that you read all documentation thoroughly to ensure that you fully understand how much you will have to pay in the event of an insurance claim – before you sign on the dotted line!
A vehicle insurance excess amount generally comprises of a compulsory excess and a voluntary excess, although some insurers have introduced other types of additional excess – see below. It is important to understand that all types of these pre-agreed amounts must be paid when you make an insurance claim. You will find the details of your compulsory insurance excess on your insurance quote and you should be able to make a decision on your voluntary insurance excess by adjusting the figure on your online quotation or speaking to your insurance company or broker. It is extremely important to check your policy documents when you receive them, either online or through the post, in order to ensure that your compulsory, voluntary and other types of insurance excess amounts are correctly listed as you agreed.
All vehicle insurance policy holders should be aware that should the cost of repairs amount to less than the vehicle insurance excess figure, they will be unable to make a claim on their vehicle insurance policy.
Compulsory Insurance Excess
The compulsory insurance excess part of your car insurance policy is set by your insurance company, not all policies will include a compulsory excess but the amount set can vary widely for those that do. Compulsory insurance excess is usually non-negotiable, although it is always worth contacting your insurance company if you feel it is unfairly steep. Drivers with a history of multiple claims or young drivers are likely to be considered as high risk, meaning they may find their compulsory insurance excess amount is at the higher end of the scale.
Voluntary Insurance Excess
The voluntary insurance excess part of your car insurance policy is an amount that you choose to pay towards the cost of the claim in the event that you make a claim on your insurance, the higher your voluntary insurance excess, the lower your insurance premium can be – as you will be voluntarily paying more towards the repairs yourself. It is important to bear in mind that the amount you choose to pay as voluntary insurance excess should be affordable, there is no point in being tempted to opt for an out of reach voluntary excess in order to reduce your premiums as you will not be able to afford to pay it when you make a claim. If you decide that you need to change your voluntary insurance excess amount after taking out an insurance policy, you will need to contact your insurance company or broker. You should be aware that you may find you will be required to pay a fee to make changes to your policy.
Other kinds of vehicle insurance excess
As previously mentioned, some insurers demand an additional insurance excess to be paid at the same time as the compulsory and voluntary excess amounts, these include:
- Young drivers
- Drivers under the age of 21 may find that they will be required to pay an additional insurance excess, this is because this age bracket is considered to be of a higher risk. If you are a driver under the age of 21 it is crucial that you check all documents thoroughly before taking out your vehicle insurance policy and ensure that the excess amounts are affordable.
- Non approved vehicle repairer
- It is extremely important that you contact your insurance company in the first instance in the event of a claim, this is because many insurers have an approved list of vehicle repairers and you may find that you will be required to pay an additional excess on top of your compulsory and voluntary excess amounts if you decide to use a vehicle repairer that has not been approved. Always check your policy for this type of additional excess before taking out vehicle insurance.
- Repair or replacement windscreen
- Another type of additional vehicle insurance excess that insurers may include in a vehicle insurance policy covers windscreen replacement or repair, once again this varies according to which company you are insured with. You may be charged an excess for both a repair or replacement, or for just replacement, check your documents before taking out your insurance policy.
Do I have to pay vehicle insurance excess if I was not at fault?
Even if you were not at fault you will find that you will probably still have to pay the vehicle insurance excess, this will include both the compulsory and voluntary amounts, as mentioned previously, it is crucial that you make sure you will be able afford to pay this amount at the time of taking out your car insurance policy. The vehicle insurance excess will be refunded once the insurance company has investigated the circumstances of the claim and confirmed that you were not at fault.
When do I have to pay the vehicle insurance excess?
The point at which you will be required to pay your vehicle insurance excess can vary, this includes both the compulsory and voluntary amounts,. Some insurers insist that payment is made up front as this is their way of getting the insurance claim started, other insurers prefer that payment of vehicle insurance excess is made when the vehicle repairs are completed and you have signed the satisfaction note to indicate that you are happy with the work that has been carried out.
What will happen if the other driver is not insured?
Unfortunately, there are those among us who feel it is acceptable to drive on the highways of the UK without vehicle insurance cover, this can complicate matters in the event of an accident with an uninsured driver, this will also be the case where the other driver leaves the scene of an accident and there is no way to identify them or track them down. How this type of incident is dealt with will vary according to your insurance company and your policy, you may find that your insurer will waive your vehicle insurance excess, they may also allow your no claims discount to remain as it was prior to the claim. It is important to remember that this will vary and that not all insurers will be as accommodating.
Can I insure against the cost of an insurance excess?
You can indeed insure against the cost of your insurance excess charges, happily there are many insurers who offer a free insurance excess cover up to a figure that is set by them, or they will refund a set amount for free. You can also buy insurance excess protection at the same time as taking out your policy, contact your insurance company to see if they offer this kind of excess protection. You will still need to ensure that your insurance excess amounts are affordable as you will be required to make payment first and then claim for a refund.
I can’t afford to pay the vehicle insurance excess!
If you find that you are unable to find the funds to pay your vehicle insurance excess, it is crucial that you contact your insurance company immediately, you will find that most reputable insurers will do all that they can to assist you, they may even allow you to set up a payment plan whereby you can settle up in instalments. However, this will almost certainly not apply to all insurers and you may find that your insurance claim will be rejected. This is why it is vital that you check all documentation before taking out a vehicle insurance policy, if you feel there is anything that you do not understand then contact your insurer for clarification. Always check that you will be able to afford your vehicle insurance excess amounts, including the compulsory, voluntary and any additional excesses.