2^nd January 2019 by ingenie

Choosing your insurance excess

I'll be straight with you: insurance is FULL of jargon. Premium this, certificate of that. It's hard enough to get your head around if you actually know a bit about how it works. If you're just trying to get your first car on the road, it's next to impossible.

Your excess is one of the most important things to understand before you buy insurance - because getting it wrong can have very expensive consequences at a time when you really don't need it.

What is an excess?

Your excess is the amount you pay towards a claim on your insurance. If you crash and it's your fault, you'll pay this much of whatever it costs to get you back on the road.

If a crash is found to be someone else's fault, their insurance will pay your damages and you won't have to pay an excess.

Most of the time, you'll be given a compulsory excess (what you HAVE to pay) and a voluntary excess, which you can choose on top of that. The more you choose for your voluntary excess, the less your insurance will cost upfront.

That's where the problem starts

Sounds good, right? You chuck in a £500 voluntary excess on top of your £350 compulsory excess and the amount you have to pay for your insurance today drops. Magic!

No. Remember why you're buying insurance: yes, to stick to the law - but also to protect you from the ginormous cost of crashing. If you crash, you will have to pay that excess.

It may seem unlikely but it's not. Even if you never get in a bad crash and you just ding your boot up a bit on a bollard, your insurance company won't give you any money towards it if it's not over your excess. Which, in the example above, adds up to £850. You get nothing.

It might not even be a crash; you might get your stereo nicked, someone could carve something gross into your paintwork - a snail could crawl into your wiring and cause havoc. Life happens. You can't just cross your fingers and assume you won't need to claim on your insurance.

If you crash, you will have to pay both your voluntary and compulsory excesses towards the cost of your claim.

Choose a voluntary excess you can afford

If you couldn't rustle up £850 tomorrow, you can't afford to pick that as your excess. It is SO IMPORTANT that you don't choose a number that would be very hard for you to pay if you needed to claim.

If the compulsory excess is £350, that's already quite a lot of money. Think honestly about how much more than that you could get your hands on if you had to. You really don't want to get in a scary crash and then slowly realise you have to pay £850 to benefit from the insurance policy you bought.