An ‘excess’ is the initial amount you must pay yourself if you are making a claim on your car insurance policy. Excesses are not limited to just car insurance – they are usually payable on most types of insurance policy.
The amount of your excess payment will be specified in your insurance policy documents. You can often decrease the cost of your insurance policy by choosing to pay a slightly higher excess amount than standard, and vice versa.
The excess payment is often deducted from the final amount paid to you by your insurer in settlement of your claim. However, some insurers may require you to pay the excess directly to them at a different time, or to pay the excess to a contractor involved in the repair of your vehicle. Your insurer will confirm to you how much they require you to pay, who you need to pay it to, and when it needs to be paid.
Before making a claim on your car insurance policy, it is sensible to consider the amount of your excess payment. Say, for example, you have to pay an excess amount of £250 and the cost of the damage to your vehicle is £255 (assuming no other vehicles are involved).
You might not feel like it’s worth making a claim on your insurance policy, as the claim may affect your no claims bonus to a much greater value than the damage to your car. Dependent on your insurer, you may be able to choose the amount of your excess payment. Make sure this is an amount you can afford if you do need to make a claim.
If you make a claim under your car insurance policy, you will usually lose some, or all, of your NCB. However, if you have an accident and are deemed to not be at fault, your NCB will not usually be affected. If both parties are at fault, then usually the NCB of both drivers will be affected.
If you are a named driver on a vehicle (rather than the policyholder) it is unlikely that you will be able to build up your own NCB.
You may have the option to pay extra on your insurance policy to protect your NCB. This means that, even if you make a claim on your car insurance policy, you will keep the NCB that you have accrued to date. However, this does not necessarily mean that your premium will not increase over time. Insurers will usually take account of your claims history when calculating the cost of your insurance. The NCB would then be deducted from the cost at the end.
However, it’s worth bearing in mind that, even if you choose to ‘protect’ your no claims bonus, it might be subject to a ‘step back’ should you have an accident. This essentially means that, instead of protecting all of your years of no claims bonus, your insurer may just ‘step back’ (reduce) the amount, usually by one or two years in line with your insurer’s ‘step back’ scale at the time of renewal.