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Less than 1 in 2 understand car insurance excesses

Richard Aucock

Written By Richard Aucock

Motorists say they are confused by complex car insurance process and confusing excesses.

Overall, only 49% say they fully understand the various rules around voluntary and compulsory car insurance excesses. 

And when it comes to those aged 18 to 24, only 17% understand compulsory excess and 23% understand voluntary excess.

It is only those aged over 65 who are more confident, according to the data from Go.Compare, with 74% understanding voluntary excess and a similar number confident about compulsory excess.

Other motorists, it seems, could be in for a nasty shock in the event of needing to make a claim.

Car accident insurance claim
Motorists who don't understand car insurance excesses may be in for a nasty surprise in the event of a bump.

What are voluntary and compulsory excesses?

Car insurance excesses are sums that either need to be paid upfront or deducted from any settlement in the event of a claim.

A compulsory excess is set out by the car insurer and cannot be changed.

A voluntary excess is chosen by the policyholder and can be changed. For example, a larger excess can result in a lower car insurance premium. It is paid on top of the compulsory excess.

The research showed that 7% didn’t realise compulsory and voluntary excesses would be added together in the event of a claim. Less than a third fully expected to pay an excess, and 12% said they were surprised at how much the excess was.

Why is there so much misunderstanding around car insurance excesses?

“Excess is clearly still one of the most misunderstood areas of insurance,” said Go.Compare’s Tom Banks.

“No one wants to spend more time or money than they have to when buying a policy, but it’s worth taking a bit of time over the details when you’re shopping around, to make sure you understand what you’re purchasing – you could be in for a nasty shock if you need to make a claim.

“Opting or a larger voluntary excess to get a cheaper policy may seem like a good option, but it is important to make sure that you could pay the excess if you had to.”

Tom added the research showed that if people had to make a claim tomorrow, 8% couldn’t afford to pay the excess. 40% would dip into their savings and 26% would use a credit card.

Compulsory and voluntary excess are added together to calculate the overall. For example, if they are both £250, the total excess is £500.

If the cost of repairs in a claim do not exceed the excess, the policyholder will not be able to make a claim. They will have to fund repairs themselves.

A larger voluntary excess can save you money on your car insurance premium, but it is important you can afford to pay it in the event of a claim. It is worth factoring this in when you’re comparing car insurance premiums.


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