What is Auto Insurance Excess?

Excess is a compulsory payment you must pay each time your insured car is repaired through the auto insurance policy. An excess payment, also known as a deductible, is a fixed amount and the payment is normally made directly to the establishment which is servicing or repairing your vehicle.

If your car is involved in an accident and it is then declared to be a ‘write off’ or ‘total loss’, then this means that the vehicle’s worth is less than the cost of the repair. In these cases, the insurance company will deduct the excess amount agreed on the policy from the settlement payment it makes to you. If the accident was the other driver’s fault, and this is accepted by the third party’s insurer, then you will be able to reclaim your excess payment from the other person’s insurance company.

There are two main types of excess:

• Compulsory Excess – This is the minimum excess payment that the insurer will accept on the insurance policy and the insured will be liable to pay this amount should the car be repaired through the insurance policy. This amount will vary according to the driver’s personal details, driving record and the insurance company.
• Voluntary Excess – In order to reduce the insurance premium, the insured may offer to pay a higher excess than the compulsory excess demanded by the insurance company. This means that you will pay the extra amount over and above the compulsory excess in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by the insurance company, they are able to then offer you a significantly lower premium.

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