Car Insurance Excess UK: Compulsory vs Voluntary Explained

What an insurance excess is

An excess is the fixed amount you agree to pay towards any claim made on your own car before the insurer pays the rest. If your repair costs 1,200 pounds and your total excess is 400 pounds, the insurer settles the remaining 800 pounds and you cover the first 400 pounds. The excess is the policyholder's share of the risk and is a standard feature of UK motor insurance.

Excesses apply to claims for damage to or loss of your own vehicle. They do not usually apply to the third party liability part of the policy, which covers injury or damage you cause to others, because that element is mandated by the Road Traffic Act 1988 and operates differently.

Understanding how much you would have to find at claim time is important, because a very high combined excess can make small claims uneconomic to pursue.

Compulsory excess explained

The compulsory excess is the amount the insurer sets and that you cannot change. It reflects the insurer's assessment of risk and varies according to factors such as the driver's age and experience, the car's insurance group and the claims history. Younger and newly qualified drivers commonly face higher compulsory excesses because their statistical claim frequency is greater.

The compulsory excess is non-negotiable, but it must be disclosed clearly before you buy. The FCA's Insurance Conduct of Business Sourcebook requires firms to communicate information in a way that is clear, fair and not misleading, which includes setting out the excesses that will apply.

Because the compulsory figure is fixed by the insurer, it is one reason quotes from different providers can differ even when the headline premium looks similar. Two policies at the same price may carry very different compulsory excesses.

Voluntary excess and the premium trade-off

The voluntary excess is an amount you choose to add on top of the compulsory excess. Agreeing to pay more towards any claim reduces the insurer's exposure, so it usually lowers your premium in return. This is a genuine trade-off rather than a saving: you pay less now and more if you claim.

Setting a voluntary excess too high can backfire. If the combined excess is larger than the cost of a minor repair, there is little point claiming at all, and you would also risk losing no claims discount for a claim the insurer barely pays out on. A sensible voluntary excess is one you could comfortably afford to pay in full.

When comparing quotes, it is worth checking both the premium and the total excess together. A cheaper premium achieved through a high voluntary excess is not necessarily better value if you are likely to make a claim.

How the two excesses combine

At claim time, the compulsory and voluntary excesses are added together to form your total excess. If the compulsory excess is 250 pounds and you added a voluntary excess of 250 pounds, you would pay 500 pounds towards a claim on your own car before the insurer pays the balance.

Some policies apply additional, situation-specific excesses on top. A common example is a higher excess for drivers under a certain age, or an extra excess for fire and theft claims. These should all be listed in the policy schedule and the Insurance Product Information Document.

For windscreen and glass claims, insurers frequently apply a separate, lower glass excess rather than the full motor excess, which is why a chipped windscreen can often be repaired cheaply without affecting the main no claims discount.

When you may not have to pay the excess

If you are not at fault and the other driver is clearly responsible, your insurer will usually pay the claim and then recover your excess from the at-fault party's insurer. In that situation you may need to pay the excess initially and have it refunded once liability is settled, depending on how the claim is handled.

Some drivers buy optional excess protection cover, which reimburses the excess you pay on a valid claim up to a stated limit. Whether this represents fair value depends on the cost of the add-on against the size of the excess, and the FCA expects such add-ons to be sold transparently.

If your insurer applies an excess you do not believe should apply, or fails to recover it in a non-fault claim, you can complain and, if unresolved, refer the matter to the Financial Ombudsman Service.

Choosing the right excess level

The most practical approach is to balance affordability against the premium discount. A higher voluntary excess only makes sense if you have the funds available to pay it and you expect to claim rarely. Drivers with a strong no claims record and a low-value car may favour a lower excess, while confident, claim-free drivers may accept a higher one to cut the premium.

Always confirm the combined figure, not just the voluntary portion, when accepting a quote. The schedule will state the compulsory excess, any voluntary excess and any age-related or peril-specific excesses, and these stack together in a claim.

Reviewing the excess at each renewal is sensible, because the compulsory figure can change as your circumstances change, for example as a younger driver gains experience.

Frequently asked questions

Do I pay both the compulsory and voluntary excess?

Yes. The two are added together to form your total excess, which is deducted from a claim on your own car before the insurer pays the rest.

Does an excess apply if someone else hits my car?

In a non-fault claim your insurer usually recovers your excess from the at-fault party's insurer. You may need to pay it initially and have it refunded once liability is agreed.

Can I reduce my compulsory excess?

No. The compulsory excess is set by the insurer and cannot be changed. Only the voluntary excess is within your control, and increasing it usually lowers the premium.

Is there a separate excess for windscreen claims?

Often yes. Many policies apply a lower, separate glass excess for windscreen repair or replacement, which is set out in the policy wording.

What is excess protection cover?

It is an optional add-on that refunds the excess you pay on a valid claim up to a set limit. Whether it is worthwhile depends on its cost against the size of your excess.