What does excess mean in car insurance? | Allianz Insurance (2025)

The amount you agree to pay towards any claim you make on your car insurance is known as an excess. And there's more than one type… find out the difference between voluntary excess and compulsory excess.

What’s a voluntary excess?

As the name suggests, voluntary excess on car insurance is different to the compulsory excess in that it’s dictated by the policyholder. Remember, this is the amount you’ll pay on top of the compulsory excess set by your insurer.

This means if you have a compulsory excess of £500 and you agree to a voluntary excess of £250, you’ll pay a total of £750 up front for your car to be repaired after an incident.

Because you’re agreeing to cover more of the cost of any claim, it’s likely that a higher voluntary excess will bring down the cost of your car insurance policy premium, as it lowers the financial risk to the insurer.

Before you take out a policy, you need to be sure you can afford to pay your total excess – both voluntary and compulsory – if you’re involved in an incident and need to claim.

What does excess mean in car insurance? | Allianz Insurance (2025)

FAQs

What does excess mean in car insurance? | Allianz Insurance? ›

In simple terms, car insurance excess is the amount you agree to pay towards the repair of your car if you need to make an insurance claim. So, if your car's damaged in an accident, there'll be a set amount you'll have to pay towards the repairs and your insurer will cover what's left of the cost.

Is it better to have high or low excess? ›

Increasing your excess is only really worth doing if you can afford to pay it. Because your insurer won't usually pay out for a claim that costs less than your total excess, it's wise not to push your voluntary excess too high. The point of an insurance policy is that you can claim on it.

What does in excess of $1000 mean? ›

phrase. In excess of means more than a particular amount. [formal]

What does the excess mean on car insurance? ›

An excess means that you, the policyholder, agree to take part of the 'insurance risk' away from your insurer, as you are agreeing to pay a portion of the initial costs of any claims.

Do I pay excess if I'm at fault? ›

You will need to pay your excess if you're in an accident and you make a claim, even if it wasn't your fault. The good news is you may be able to recover this amount from your car insurance provider if there is evidence that the accident was someone else's fault.

What does $5000 excess mean? ›

So, if your car has been damaged in an incident, and the repair bill comes to $5000, you will pay for the first portion of the repair bill with your excess. If your excess is $500, the insurance company will pay for the remaining $4500. This doesn't mean you always have to pay the excess if you have an accident.

What does $200 excess mean? ›

For example, if you purchase your policy with a $200 excess and you submit a claim for $600, you are liable for the first $200 and we would reimburse $400. The lower the excess amount you choose, the higher your insurance premium.

What is $500 excess? ›

Choosing a policy with an excess means your premiums will be cheaper. It can sound complicated, but it's a pretty straightforward process – if your policy has an excess of $500, you pay this amount to the hospital and we deal with the rest – provided your procedure is covered by your policy.

How do you calculate excess money? ›

The formula for calculating excess cash is: Excess Cash = Total Cash – MAX (Total Current Liabilities – Total Current Non-Cash Assets) Where: Total Cash = Cash and cash equivalents + short term investments Total Current Non-Cash Assets = Total Current Assets - Total cash Most growing businesses have high working ...

What is excess payout? ›

A: An excess payment is the amount you have to pay towards a claim. Insurance policies have different types of excesses that can apply in different situations. The amount and types of excess you would be required to pay is listed in your insurance documents.

Can I claim my excess back? ›

You can and should get any excess you had to pay out, recovered from the at-fault driver's insurer. However, depending on the complexity of your claim, this can take anything from a couple of months to several months to be returned. We know of drivers sometimes having to wait over a year to get their excess back.

What is the purpose of excess in insurance? ›

The excess helps keep the cost of handling and meeting insurance claims down and so the premiums everyone pays are cheaper.

What does excess insurance cover? ›

An excess liability insurance policy, also known as excess liability coverage, offers financial protection and higher policy limits if a claim is made that exceeds the limit of an underlying liability policy. It's similar to having an additional insurance policy on top of your existing coverage.

How much excess should I pay? ›

How much voluntary excess should I pay? The amount of voluntary excess you should add to your policy depends on how much you can afford to shell out if you need to make a claim. When you run a quote on MoneySuperMarket, you'll be asked how much voluntary excess you wish to add to your policy.

How does insurance work when it's not your fault? ›

If you file a claim with your carrier when you are not at fault, your carrier will eventually begin a process called subrogation. Essentially, this means that once liability is determined, your insurance carrier will send a demand to the at-fault party's carrier to pay back the damages that were paid out to you.

What is excess protection? ›

Excess protection insurance helps you recover the excess you've paid after making a claim. It's also known as insurance excess cover or excess reimbursement insurance. Excess protection is typically bought as part of a car, home, property or landlord insurance package. It isn't usually available as a standalone policy.

What is the benefit of higher excess? ›

A higher excess will reduce your premium. A lower excess means you'll pay less if you make a claim, but your premium will be higher.

Is it better to have high or low credit limit? ›

A higher credit limit gives your greater flexibility to fund expensive purchases, including emergency expenses. Lowers your credit utilization ratio. Your credit utilization ratio, generally expressed as a percentage, is the amount of revolving credit you're using divided by the total revolving credit available to you.

Is it better to have high or low interest? ›

When interest rates are high, it's more expensive to borrow money; when interest rates are low, it's less expensive to borrow money. Before you agree to a loan or sign up for a new credit card, it's important to make sure you completely understand how the interest rate will affect the total amount you owe.

What voluntary excess should I choose? ›

The “best” voluntary excess will differ from person to person. You will have to balance the savings your extra excess will make on your premium with the sum you will have to fork out in the event of making a claim. Either way, you should not agree to an excess that you cannot afford.

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