If you’ve come across the term car insurance deductible, you might be wondering what it actually means.
In the UK, a deductible is more commonly known as an insurance excess. It’s the amount you agree to pay towards the cost of a claim before your insurer pays the remaining amount.
Here’s everything you need to know about how deductibles (or excesses) work, the difference between compulsory and voluntary excess, and how choosing the right amount can affect your insurance premium.
For more insurance guidance, visit our valuation guidance hub, where you’ll find expert articles covering everything from choosing the right policy to understanding how claims work.
How do car insurance deductibles work?
When you make certain types of insurance claims—such as for accidental damage or theft—you’ll normally pay an excess before your insurer contributes towards the remaining repair costs.
For example:
- Your repair bill is £2,000
- Your total excess is £400
- You pay £400
- Your insurer pays £1,600
The excess only applies to certain types of cover, such as:
- Comprehensive insurance
- Collision or accidental damage
- Theft claims
- Fire claims
It does not usually apply to third-party liability claims where you’re paying for damage caused to someone else’s vehicle or property.
If you’re comparing policies, and figuring out what is what, it might be worth looking into What Is Fully Comprehensive Car Insurance? so you know all your insurance options available.
What is the difference between compulsory and voluntary excess?
Most UK car insurance policies include two different types of excess.
Compulsory excess
This is the minimum excess set by your insurer.
You cannot remove or reduce it.
The amount often depends on factors such as:
- Your age
- Driving experience
- Type of vehicle
- Claims history
Voluntary excess
This is an additional amount you choose when taking out your policy.
Increasing your voluntary excess usually lowers your insurance premium because you’re agreeing to contribute more if you make a claim.
However, you’ll need to ensure you could comfortably afford this amount if you ever need to claim.
What happens if my excess is higher than the repair bill?
If your repair costs are lower than your excess, your insurer won’t pay anything.
For example:
- Repair costs: £350
- Total excess: £500
You’ll pay the full £350 yourself because it doesn’t exceed your excess.
This is why many drivers choose not to claim for smaller repairs, particularly if it could affect future premiums.
High vs low insurance excess
Choosing your excess is largely about balancing lower premiums with potential repair costs.
Higher excess
Pros
- Lower monthly or annual premiums.
- Can reduce overall insurance costs if you rarely claim.
Cons
- Higher out-of-pocket costs if you need to make a claim.
Lower excess
Pros
- Smaller payment if you need to claim.
- Greater financial certainty after an accident.
Cons
- Higher insurance premiums.
- May cost more overall if you never claim.
There isn’t a single right answer—it depends on your budget and your appetite for risk.
How does your excess affect your insurance premium?
Generally speaking:
- Higher excess = Lower premium
- Lower excess = Higher premium
This is because the insurer takes on less financial risk when you agree to pay more yourself.
When choosing your excess, think about:
- How much savings you have available.
- The value of your vehicle.
- How often you drive.
- Whether you could comfortably afford your chosen excess after an accident.
Do you pay an excess if you hit another car?
It depends who was at fault.
If you caused the accident
If you claim under your own comprehensive insurance to repair your vehicle, you’ll normally pay your excess.
Your insurer will then pay the remaining repair costs.
Damage to the other driver’s vehicle is generally covered under your liability insurance and doesn’t involve paying an excess.
If another driver caused the accident
If the other driver’s insurer accepts liability, you may not have to pay your excess.
However, if you initially claim through your own insurer, you might pay your excess first before your insurer attempts to recover it from the at-fault driver’s insurer.
If successful, your excess is usually refunded.
Should you choose a higher voluntary excess?
Choosing a higher voluntary excess can make sense if:
- You have emergency savings available.
- You’re an experienced driver with a low claims history.
- You’re comfortable accepting more financial responsibility in exchange for lower premiums.
If paying several hundred pounds unexpectedly would be difficult, a lower excess may provide greater peace of mind.
Final thoughts
A car insurance deductible—or insurance excess in UK terminology—is simply the amount you agree to contribute towards a claim.
Choosing the right excess is about finding the balance between affordable premiums today and affordable repair costs if something goes wrong tomorrow.
Before choosing your excess, make sure it’s an amount you could realistically afford if you ever needed to make a claim.
Want to know how where you live can affect future costs? We’ve looked into What Are The Worst Postcodes For Insurance Premiums? so you’ve got everything you need to know.
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