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What is an insurance excess?

Excess is the first part of the claim you have agreed to pay. This should only be applied to claims on your own vehicles and not claims against you. These come under the following titles.

Statutory or Compulsory Excess

This is the lowest excess on your policy you can pay. It forms the basis of how the insurer underwrites the policy so the higher this excess, the higher the risk they attach to it.

>> What's an uninsured loss

Voluntary Excess

This is the amount you have volunteered to pay in addition to the compulsory excess, so the two are added together.

The higher the voluntary excess, the lower the premium will be. Make sure you can afford to pay it in the event of an accident.

Young Driver Excess

If you are a young driver (someone under 25) you may well find this excess applied. This also is added to the Compulsory Excess. Check the policy, as your insurer may advise they add all three together.

In addition, there are products available you can use to 'insure' your excess, that way you do not have to pay it if you have an accident. You can also get a lower premium by having a higher excess, saving many hundreds of pounds, so it makes sense to insure it.

>> Your complete guide to motor insurance

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Representative example

Borrowing £7,500 over 4 years with a representative APR of 25.4%, an annual interest rate of 25.4% (Fixed) and a deposit of £0.00, the amount payable would be £239.77 per month, with a total cost of credit of £4,008.96 and a total amount payable of £11,508.96.

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