Car Insurance Excess Explained: Compulsory, Voluntary and When Not to Claim
Last fact-checked: March 2026
Key Takeaways
- →Your total excess is made up of two parts: a compulsory excess set by your insurer and a voluntary excess you choose yourself. Both are paid together when you claim.
- →A higher voluntary excess lowers your premium, but you must be able to afford the full excess amount at the point of a claim. If you cannot pay it, your claim will not proceed.
- →You only pay excess on claims where your insurer pays out. If the other driver is at fault and their insurer settles directly, you typically pay nothing.
- →Young and new drivers often face compulsory excesses of £300 to £500 or more on top of any voluntary amount. Total excess on some young driver policies can exceed £1,000.
- →If your repair cost is less than or close to your total excess, claiming is usually pointless. You pay the excess, receive little or nothing back, and risk losing your no-claims bonus.
- →Excess is applied per claim, not per year. Two separate incidents in the same year mean you pay the full excess twice.
Car insurance excess is one of those terms that most drivers accept without fully understanding. You know you will have to pay something when you claim. But many people only find out their total excess figure at the point of making a claim, when it is too late to change it.
Getting your excess level right has a direct impact on both your premium and your ability to actually use your cover. This guide explains exactly how excess works, the difference between compulsory and voluntary, how to choose the right level, and when claiming is not worth it.
💬 From the MMC Team
“The most common mistake we see is drivers setting a voluntary excess of £500 to reduce their premium by £40, then finding at claim time they cannot actually afford the total £750 excess. Your excess is only useful if you can genuinely pay it the day you need to. Set it based on what you can afford at short notice, not what looks good on a comparison site quote.”
MMC Insurance Specialists, FCA-authorised (reg. 916241)
Key Fact
Your total excess is compulsory excess plus voluntary excess added together. If your compulsory excess is £250 and your voluntary is £200, you pay £450 before your insurer contributes a penny to any claim.
What Is Car Insurance Excess?
Excess is the amount you contribute towards the cost of a claim before your insurer pays the remainder. If your car needs £1,000 of repairs and your total excess is £400, you pay £400 and your insurer pays £600.
Excess exists because it discourages small or frivolous claims. If your insurer paid every tiny scratch and scuff, the administrative cost alone would make premiums unaffordable. By requiring policyholders to contribute to each claim, insurers keep premiums lower and manage claim volumes.
Your total excess is made up of two separate components: compulsory excess and voluntary excess. You need to understand both before you can make a sensible decision about your cover.
Compulsory Excess vs Voluntary Excess
Compulsory excess is set by your insurer and cannot be changed. Voluntary excess is an additional amount you choose to add on top. Both are paid at the time of a claim.
| Type | Who Sets It | Can You Change It? | Typical Range | Effect on Premium |
|---|---|---|---|---|
| Compulsory excess | Your insurer | No | £100–£500+ | Fixed, reflects your risk profile |
| Voluntary excess | You | Yes, at quote | £0–£500+ | Higher voluntary = lower premium |
| Total excess | Both combined | Partially | £150–£1,000+ | Amount you pay on every claim |
Compulsory excess reflects your risk to the insurer. Young drivers, drivers with recent claims, high-performance cars, and drivers with convictions typically face higher compulsory excesses. The insurer is using this mechanism to share some of the financial risk of covering you.
Voluntary excess is your choice. Adding a voluntary excess reduces your premium because you are agreeing to take on more financial risk yourself. The premium saving for each additional £100 of voluntary excess varies by insurer and by your risk profile, but a £250 voluntary excess typically saves between £30 and £100 per year on a standard car insurance policy.
⚠️ The Excess Trap
A voluntary excess only saves you money if you never claim, or if any claim is significantly higher than your total excess. If you set a £400 voluntary excess to save £60 on your premium, and then make a claim in year one, you have effectively paid an extra £340 for the privilege of cheaper cover. Calculate the break-even point before adding voluntary excess.
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How Much Voluntary Excess Should You Set?
Set your voluntary excess at the maximum amount you can genuinely afford to pay at short notice. Not what you could scrape together in an emergency, but what you could comfortably transfer on the day your insurer asks for it.
The right level depends on your financial situation. A driver who has £500 readily accessible in a current account can sensibly set a higher voluntary excess than a driver who lives month to month. The premium saving is real, but only if you can back it up when it matters.
Also consider your compulsory excess before adding voluntary. If your insurer has already set a compulsory excess of £400, adding a £300 voluntary excess means you pay £700 upfront on any claim. For many drivers, that is a significant sum at short notice.
| Voluntary Excess | Typical Premium Saving | When It Makes Sense | Watch Out For |
|---|---|---|---|
| £0 | No saving | Tight budget, cannot afford large upfront costs | Higher premium each year |
| £100–£200 | £15–£40/yr | Some savings buffer, low claim risk | Small saving, moderate exposure |
| £250–£350 | £40–£80/yr | Experienced driver, clean record, savings available | Total excess can reach £600+ with compulsory |
| £500+ | £80–£150/yr | Confident driver, strong financial buffer, older car | Total excess may exceed car value on older vehicles |
Savings figures are indicative averages for standard comprehensive cover on a mid-range car. Actual savings depend on your insurer, vehicle, age, and risk profile.
When Do You Pay Excess and When Do You Not?
You only pay excess when your insurer pays out on a claim. If the other driver is fully at fault and their insurer settles everything directly, your insurer pays nothing and you pay nothing.
| Scenario | Do You Pay Excess? | Notes |
|---|---|---|
| At-fault accident, your insurer pays repairs | Yes, full excess | Both compulsory and voluntary combined |
| Not at fault, third party insurer pays directly | No | Their insurer handles the claim in full |
| Not at fault, your insurer pays then recovers | Possibly initially | Excess usually refunded once recovery confirmed |
| Windscreen repair (not replacement) | Often no excess | Many policies have £0 excess for windscreen repair |
| Windscreen replacement | Separate excess applies | Typically £75–£125, separate from main excess |
| Theft of vehicle | Yes, full excess | Applies even though you are not at fault |
| Fire damage | Yes, full excess | Applies regardless of cause |
| Two separate claims in same year | Full excess both times | Excess applies per claim, not per year |
When Is It Not Worth Claiming?
If the repair cost is less than your total excess, there is no point claiming. Your insurer pays nothing and you end up worse off: you have paid your full excess, received nothing, and you have recorded a claim that can still affect your no-claims bonus and future premiums.
Even when the repair cost is slightly above your excess, claiming may still not be worthwhile. You need to weigh the net payout (repair cost minus excess) against the long-term premium impact of having a claim on your record.
Should You Claim? A Quick Decision Guide
Claim is probably worth it when:
Repair cost is at least double your total excess. You have protected NCB. The other driver is at fault with a traceable insurer. The damage is structural or affects safety.
Consider not claiming when:
Repair cost is less than or close to your excess. You are at fault and have unprotected NCB. The damage is cosmetic and the car is older. You can afford the repair out of pocket.
The true cost of a claim
Beyond your excess, an at-fault claim can increase your premium by 20 to 50% at renewal and affect pricing for 3 to 5 years. Factor this in before calling your insurer.
What to do instead of claiming
Get a repair quote first. If it is close to your excess, pay privately. Keep a record of the incident in writing in case the other party later makes a claim against you.
💼 Real Example
A driver with a £250 compulsory excess and a £200 voluntary excess (total: £450) reverse-dents their rear bumper in a car park. Repair quote: £380. They claim. Their insurer pays £380 minus £450 excess, which means the insurer actually pays nothing, the driver pays the full £380 themselves, the claim goes on their record, and they lose 2 years of no-claims bonus. Net result: they would have been better off paying the repair privately and not notifying their insurer at all.
Excess and Young Drivers
Young and inexperienced drivers face some of the highest compulsory excesses in the market. It is not unusual for a 17 to 21 year old to face a compulsory excess of £400 to £600, meaning their total excess can exceed £1,000 if they have also added a voluntary amount.
Insurers use high compulsory excesses for young drivers as a risk-sharing mechanism. Statistical claim frequency is significantly higher in the under-25 group. By setting a high compulsory excess, the insurer ensures young drivers share a meaningful financial stake in every incident.
If you are a young driver, it is particularly important not to add a large voluntary excess on top. Your compulsory excess is already high. Adding £300 of voluntary excess to save £40 on your annual premium is a very poor exchange if you end up needing to claim in your first year. Consider a telematics or black box policy instead. These reduce premiums through driving behaviour data rather than excess manipulation.
Does Excess Apply on Third Party and TPFT Policies?
On a third party only (TPO) or third party, fire and theft (TPFT) policy, excess applies to the fire and theft sections, but not to third party liability. Third party liability cover pays out to other people, not to you, so no excess is deducted.
On a TPFT policy, if your car is stolen or destroyed by fire, your insurer will pay the claim minus your excess. The same total excess (compulsory plus voluntary) applies. If your car is worth £3,000 and your excess is £800, you receive £2,200.
For comprehensive policies, excess applies to all claims made against your own policy, including accidental damage, fire, theft, and in some cases weather damage. It does not apply to claims made against you by third parties.
Before You Set Your Excess: A Checklist
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Check your compulsory excess first. Find out what your insurer has set before deciding on any voluntary amount. -
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Calculate the total, not just the voluntary part. Add compulsory and voluntary together. That is what you pay on any claim. -
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Only set voluntary excess you can actually pay. Ask yourself: could I transfer this amount today if I needed to? -
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Compare the premium saving against the risk. If a £250 voluntary excess saves £35 per year, it takes over 7 claim-free years to break even versus a £0 voluntary excess. -
✓
Check for separate windscreen excess. Most policies have a different (lower) excess for windscreen claims. It is usually shown separately in your policy schedule. -
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Consider your car’s value. Setting a high excess on a car worth £2,000 means a significant claim could pay out less than you expect after excess is deducted.
⛔ Excess Mistakes That Cost Drivers Money
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Setting voluntary excess without checking the compulsory amount first. Many drivers don’t realise their total exposure until they make a claim. -
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Claiming when the repair cost is below the excess. The insurer pays nothing, you pay the repair, and you still have a claim on your record. -
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Assuming excess applies once per year. It applies per claim. Two incidents in one year mean you pay the full excess twice. -
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Setting a high excess on a low-value car. If your car is worth £1,500 and your total excess is £700, you only ever receive a maximum of £800 from a total loss claim.
Frequently Asked Questions
Disclaimer: This article is for informational purposes only and does not constitute financial or insurance advice. Excess figures and premium savings are indicative based on typical UK market conditions in 2025/26. Your actual excess and premium will depend on your individual circumstances and chosen insurer. Always read your policy documents carefully. MyMoneyComparison.com is FCA-authorised and regulated (reg. 916241).
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