Compulsory car insurance excess: What does it mean?

Compulsory car insurance excess is the fixed amount that you must pay towards any claim you make on your car insurance policy. This amount is set by the insurance provider and is a non-negotiable part of the policy. Essentially, it's the portion of the claim that you are responsible for paying before the insurance company covers the rest.For example, if you have a compulsory excess of £100, and the repair costs for a claim come to £500, you would pay the first £100, and your insurance provider would cover the remaining £400.The purpose of compulsory excess is to deter small or frivolous claims and to share some of the risks with the policyholder, which can lead to reduced premiums.

Compulsory car insurance excess: The long answer

Compulsory Car Insurance Excess refers to the amount of money that a driver is required to pay towards an insurance claim before their insurance company covers the remaining costs. In the UK, it is a legal requirement for all drivers to have car insurance, and the excess is a standard feature of most insurance policies.

When a driver is involved in an accident or makes a claim for damage to their vehicle, they will need to pay the compulsory excess amount out of their own pocket. This amount is predetermined by the insurance company and can vary depending on factors such as the driver's age, driving history, and the type of vehicle insured.

For example, if a driver has a compulsory excess of £250 and makes a claim for £1,000 worth of damages, they will need to pay the first £250 themselves, and the insurance company will cover the remaining £750.

It is important for UK drivers to understand their compulsory car insurance excess as it affects the cost of their insurance premiums. Typically, higher excess amounts result in lower insurance premiums, as drivers take on a greater share of the financial risk in the event of a claim.

However, it is crucial to consider whether you can afford to pay the excess amount if an accident occurs. Some insurance policies also offer voluntary excess, which allows drivers to choose a higher excess amount in exchange for lower premiums. This can be an option for drivers who are confident in their driving skills and want to reduce their insurance costs further.