what does excess mean in insurance

Excess in insurance is the amount you agree to pay yourself towards a claim before your insurer pays the rest of the covered costs. It is also sometimes called a “deductible” in some markets, especially in the US.

Simple meaning

• Excess = your share of the loss on each claim, up to a fixed amount stated in your policy.

• After you pay the excess, the insurer covers the remaining approved amount, up to the policy limit.

• If the total damage is less than or equal to your excess, there is usually no point claiming because the insurer would not pay anything.

Quick example

• Your car repair bill after an insured accident is £1,500.

• Your total excess (compulsory + voluntary and any other special excesses) is £800.

• You pay £800 and the insurer pays the remaining £700, assuming the claim is approved.

If the repair bill had been £800 and your excess was also £800, you would effectively get no payout and the claim would usually not proceed.

Types of excess

Many policies break excess into different parts:

• Compulsory excess
  • Set by the insurer and cannot be removed.
  • Reflects the basic risk of the policy (for example, young drivers or high‑performance cars often have higher compulsory excess).

• Voluntary excess
  • Extra amount you choose to add on top of the compulsory excess.
  • Taking a higher voluntary excess generally lowers your premium because you are agreeing to pay more if you claim.

• Special or additional excesses
  • May apply for specific situations, such as young or inexperienced drivers, certain vehicle types, or using a non‑approved repairer.

* These are added to the compulsory and voluntary excess to form one total excess for that claim.

Why insurers use excess

Excess exists partly to keep insurance affordable and discourage very small or frequent claims.

• When customers carry a small part of each loss, premiums can be lower overall.
• It also encourages people to only claim for meaningful losses, which helps control the insurer’s claim costs and, in turn, premium levels.

Quick tips when choosing an excess

• Higher excess usually = lower premium, but more out-of-pocket if something happens.

• Lower excess usually = higher premium, but smaller surprise cost at claim time.
• Always check:
  • How many different excesses can stack together on one claim.
  • Whether any special excesses apply to your age, property type, or claim history.

In short: excess in insurance is the up-front part of a claim you must pay yourself before your cover “kicks in,” and adjusting it is one of the main levers for balancing premium cost against what you can afford if you need to claim.

Information gathered from public forums or data available on the internet and portrayed here.