Excess insurance policies
Even though you may pay out hundreds of pounds a year for your car insurance, you may still have to pay out more in the case of an accident, in the form of your policy’s excess.
Excess insurance is designed to cover the cost of your main car insurance plan’s excess. This means that in the case of an accident, you will not have to pay for the cost of your insurance’s excess.
In This Guide:
- Excess - what is it?
- Excess insurance explained
- Types of excess insurance
- Is excess insurance worth it?
- How to get the best cover
Excess - what is it?
An excess is a payment that your insurance company will ask you to pay towards any claim that you make.
Normally the total sum of your excess will be divided into two parts:
- Compulsory excess: This sum is set by your insurer and will often vary upon your age and your driving experience. The type of car that you are insuring will also be a factor in deciding how much you will have to pay towards this.
- Voluntary excess: This is set when you apply for your insurance policy. The higher the level of your voluntary excess, the lower the cost of your plan. This can be a good way to lower the initial cost of your insurance policy, but it is worth remembering that in the case of an accident, you will have to pay this amount in full.
Excess insurance explained
Excess insurance is a form of insurance that works next to your traditional car insurance policies. This insurance will pay for your excess in the case of an accident. The total amount that your excess insurance will cover varies depending on the amount agreed between you and then insurer.
You choose the upper limit of your excess insurance. The most sensible thing to do is to set it to equal the upper limit of your car insurance’s excess. If you set it higher than that, then you will end up paying higher premiums for an excess limit that you will never reach.
Another option is to set a lower limit to your excess insurance. This will not cover the whole amount of your excess, but it will still go some way to helping you foot the bill.
Types of excess insurance
There are generally two types of excess insurance that you can purchase. The first of these is single excess – the form which we have discussed here. The second type of excess insurance is known as lifestyle excess insurance. This form of excess insurance covers excesses on several different types of insurance policies. These include, but are not limited to, pet, home and travel insurance.
One thing to remember when you take out a lifestyle excess insurance policy is that your excess limit is applied across all your insurance policies. This means that if your limit if £300, then you cannot claim more than this throughout all your policies per year. For example, if you claimed £250 on excess insurance for a claim, then you only have £50 remaining for the rest of the year.
Is excess insurance worth it?
When it comes to making a claim on your car insurance, you could be in for quite a shock if your excess is high. While increasing your voluntary excess can result in cheaper car insurance, setting it too high can make it unaffordable to even claim in the first place. It’s all about finding the right balance.
However, if you’re concerned about being able to afford to claim, excess insurance can be very useful. For just a few extra quid a month, you won’t have to worry about paying any excess as this will now be covered by your insurance provider.
How to get the best cover
Before taking out excess insurance, it is important to consider the following when you compare policies:
- Type of policy: Do you only need excess cover for your car insurance, or will you benefit from lifestyle excess insurance? Getting cover for your car, home and travel insurance under one policy can save you money overall.
- Claims limit: Insurance providers will agree with you a limit to what they will pay out. Make sure you’re covered just for the right amount so you’re not paying too much.
- Travel cover: Do you ever take your car abroad? If so, it’s worth checking what policies will extend your cover for when you’re driving in Europe or elsewhere.
- Price: Of course, you want the best you can get for your money. Compare car insurance policies with Money Expert to make sure you’re getting the best price.