Excess car insurance is the money that the insured has to pay when he is at fault for an insurance claim. Generally, deducts the excess amount from the payout. Sometimes, the insured is asked to pay the excess first so as to get the claim authorised. If it is found that he/she was not at fault, this money is refunded to their account. There are generally two kinds of excesses, one called the voluntary excess and another called the compulsory excess by the insurer. The latter is mainly for younger, more inexperienced drivers whose value decreases as the drivers get older than (usually) 25.
Compulsory Excess
This is generally put up by the insurer unlike voluntary excesses. Some amount is fixed to be paid by the insured whenever they make a claim. Younger drivers generally have higher compulsory excesses which may go up to ?500 as they are more likely to make a mistake. This way, companies discourage claims for every scratch on the vehicle. Having compulsory excesses also reduces the premium amount on the insurance that one has to pay every year.
Voluntary Excess
This is chosen by the insured. Some people may opt for a higher voluntary excess since they can pay lesser premiums as a result. This is also useful to the insurance company as they shall have to pay a reduced amount in case of a claim. However, in case of a claim, it may prove costly to pay both compulsory and voluntary excesses. Also, remember that for younger and more inexperienced drivers or for those who have made many claims in the past already, paying voluntary excesses may not give a discount on the premiums.
Some consider not only the driver’s age, but also their gender as men are known to drive more than women and have higher accident rates. However, on March 1, 2011, the European Court of Justice accused insurance companies of breaching equality rights saying these companies were discriminating against men. Previous accidents or driving history are also taken into account while fixing one’s excesses; rash drivers who have a bad traffic history are also likely to get higher compulsory excesses.