The term "excess" in car insurance is the amount of money that needs to be paid by an insured when a claim is filed. Excess is similar to a deductible because the amount has to be paid before an insurance company will issue payment. The amount of excess varies by country and the amount that was agreed to in the policy.
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In the United Kingdom one type of excess payment is called compulsory excess. This is the minimum amount an insurer will accept on any type of car insurance policy. The amount of excess that is paid is determined by a driver's age, driving record and the insurance company that is writing the policy. A younger driver typically has a higher compulsory excess payment than an older driver.
When a person purchases a car insurance policy a voluntary excess amount can be included on the policy. Voluntary excess is an extra amount beyond the compulsory excess amount that a person agrees to pay if a car insurance claim is made on the policy. The amount of voluntary excess that is selected is a major factor in the cost of the policy.
The amount of premium that is paid for the policy can be decreased by selecting a higher excess amount to pay when there is a claim. A higher excess amount can be beneficial for younger drivers because their premiums can be reduced significantly. Keep in mind that if an accident occurs the high excess amount will need to be paid when making a claim.
The excess payment is typically made to a repair shop if the car can be repaired. You will be required to pay the excess amount because the car repair shop will not release the vehicle until the excess has been paid. Always get a receipt from a car repair shop for the excess payment because it may be needed later for documentation.
When a claim is filed on a car insurance policy the excess amount will need to be paid first by the policy owner. Once the excess has been paid the insurance company will pay the remainder of the claim. If a vehicle is a total loss the insurance company will pay out the amount of the claim less the excess amount. If an accident was the other driver's fault the excess payment can be reimbursed by the other driver's insurance company.
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