When you take out car insurance, one of the key decisions you’ll need to make is how much excess to pay. It might seem like a small detail, but it can have a big impact on both your premiums and your finances if you ever need to make a claim. A lower excess means your insurer covers more of the cost when something goes wrong – but you’ll pay a higher premium. A higher excess reduces your premium, but you’ll need to pay more out of pocket if you have an accident. Here’s how to understand how excess works and how to choose the right level for you.

What does “excess” mean?

Your excess is the amount you agree to pay towards the cost of a claim. The insurer covers the rest. For example, if your excess is £300 and the repair costs £1,200, you’ll pay the first £300 and your insurer will pay the remaining £900.

Excess usually applies per claim, and there can be different types. The compulsory excess is set by your insurer and can vary depending on factors such as your age, driving experience, or the type of car you drive. The voluntary excess is the amount you choose to add on top of that – and it’s this part that you can adjust to influence your premium.

Why does your excess matter?

Your excess is one of the main factors that affects the cost of your car insurance. The higher the excess you choose, the lower your premium tends to be, because you’re taking on more of the financial risk yourself. A lower excess, on the other hand, means the insurer takes on more risk, so your premium will be higher.

It’s all about finding the right balance between what you can afford to pay regularly and what you could manage to pay if you had to make a claim.

Pros and cons of high and low excess

There’s no one-size-fits-all answer – the right level depends on your personal circumstances, your car, and how you drive.

High excess – lower premium

• You’ll pay less for your insurance each month or year.
• You take on more of the financial risk yourself.
• A good option if you rarely make claims and could comfortably afford a larger one-off payment if needed.

Low excess – higher premium

• You’ll pay more for your insurance, but less if you need to claim.
• Offers greater peace of mind, especially if you drive frequently, park on the street, or have a high-value car.
• Ideal if you prefer predictable costs and want to avoid a large unexpected bill.

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How to find the right level for you

When deciding on your excess, consider these three questions:

1. How much could you afford to pay unexpectedly? If you could easily cover £500 or £1,000 in the event of a claim, a higher excess could make sense. If that would stretch your budget, a lower excess might be safer.

2. How often have you claimed in the past? If you’ve been claim-free for years, you might benefit from a higher excess and lower premiums. But if you’ve had several claims, a lower excess could save you money in the long run.

3. What’s your driving environment like? If you mostly drive on motorways or in rural areas, your risk of minor damage may be lower. But if you often drive or park in busy city streets, a lower excess could give you more peace of mind.

Check the details carefully

Excess amounts and rules vary between insurers and policies. Some insurers offer:

• Flexible excess options – allowing you to choose the amount when you take out the policy.
• Reduced excess for certain claims – for example, windscreen repairs or if you use an approved repairer.
• Higher excess for young or inexperienced drivers – or if someone under 25 drives your car.

Always read your policy documents carefully so you know exactly when and how your excess applies.

Remember: you can adjust it later

Your excess isn’t set in stone. You can usually change it if your circumstances change – for example, if you buy a new car, move house, or your financial situation improves. It’s a good idea to review your car insurance each year to make sure it still suits your needs.

In short: balance peace of mind and cost

Choosing your excess is about finding the right balance. A low excess offers reassurance but costs more in premiums. A high excess saves you money day to day but means a bigger bill if you need to claim. By considering your budget, driving habits, and risk tolerance, you can find the level that fits you best – and drive with confidence knowing your insurance works for you.