What is car excess insurance and how does it work?

You’ve probably come across the word excess before, but it can be rather confusing. Is it something you pay? Is it deducted? Is it worth having? The fact of the matter is that the excess can make a considerable difference, in terms of the insurance premium and what you’ll have to pay out of your own pocket if you’re involved in an accident. And this applies if you have, for example, excess car insurance, but in other policies too. Let’s see what having excess really entails and when it might be of interest to you.

What is excess?

The excess is the amount you agree to pay if you are involved in an accident. In other words, when your insurance covers damage, you pay part of the cost and the rest is covered by the insurer. For example, if you’ve agreed to €300 excess and the repair costs €1,000, you would pay €300 and the company would foot the remaining €700 bill.

This system is used in a number of different types of insurance: from car and home insurance to health and liability policies, provided this option has been agreed upon beforehand.

How does comprehensive excess insurance work?

Comprehensive excess insurance is extremely common in car insurance. If this is what you’ve taken out, you’re fully covered against claims, but you pay a fixed sum in each case.

For example, if you have car insurance with an excess of €300 and have an accident that causes €2,000 in damage, you’ll pay €300 and the insurer will pay the remaining €1,700.

Similarly, the excess applies in the event of a claim involving own damage and when there is no responsible third party or no one has been identified, since, in this case, you can claim the excess amount from the person responsible for the accident.

Excesses do not apply to damages to third parties, or damages caused as a result of theft or broken windows, when an own-damage guarantee is taken out. However, the possibility of taking out the own damage insurance is subject to the vehicle’s age.

What are the main benefits of comprehensive car insurance with an excess?

Taking out comprehensive car insurance with an excess can be an excellent option if you're looking for extensive protection at a more affordable price. Although you'll be responsible for paying part of the cost in the event of a claim, this type of policy offers several important benefits, especially if you don't usually have accidents.

• Lower premium: by sharing part of the risk with the insurer, the cost of your insurance is generally lower than a policy without an excess.
• Comprehensive cover for major claims: you continue to enjoy extensive protection, even in the event of serious or costly damage.
• Greater control over which claims to report: you can decide whether it's worth paying for minor repairs yourself and avoid any potential increase in your premium.
• Ideal for drivers with a good claims history: if you've had very few accidents, you can save money without sacrificing cover.
• Efficient claims handling for major incidents: when the cost of the damage exceeds the excess, the insurer takes care of the rest of the claims process.

Differences between insurance with an excess and insurance without an excess

When choosing a car insurance policy, one of the first decisions you'll need to make is whether you want cover with or without an excess. Both options have advantages and disadvantages, and the best choice depends largely on your personal circumstances, such as how often you use your car, how frequently you make claims and your budget. To help you decide, here are the main differences between the two options.

• Insurance premium
  • With an excess: the annual premium is generally lower.
  • Without an excess: the premium is higher because the insurer assumes 100% of the risk.
• Your contribution to repair costs
  • With an excess: you pay part of the cost of the claim (for example, the first €300).
  • Without an excess: you pay nothing, provided the claim is covered by your policy.
• Handling minor claims
  • With an excess: it is often not worth claiming for low-cost damage.
  • Without an excess: you can report any covered claim without worrying about the cost.
• Recommended driver profile
  • With an excess: ideal for experienced drivers or those with few previous claims.
  • Without an excess: recommended for those seeking complete peace of mind and cover from the first euro.
• Peace of mind
  • With an excess: gives you greater control over which incidents you choose to report.
  • Without an excess: provides maximum protection without having to pay additional costs.

When is insurance with an excess recommended?

Insurance with an excess may be particularly suitable in certain situations and for specific driver profiles. The most common examples are:

• Experienced drivers with few claims: if you've been driving for many years and rarely have accidents, you're unlikely to need to make claims frequently. In this case, you can benefit from a lower premium without giving up comprehensive cover.
• People who use their car occasionally: if you only drive at weekends, during holidays or for short journeys, the risk of an accident is lower. Insurance with an excess can help you save money.
• Owners of older vehicles: if your car is no longer new and you don't need full cover from the first euro, this option allows you to enjoy comprehensive insurance at a lower cost.
• Drivers looking to protect themselves against major damage: if you're happy to cover the cost of minor repairs yourself but want protection against serious damage, an excess offers a good balance between cost and cover.

Ultimately, this type of insurance is designed for people who want comprehensive protection while keeping their insurance costs under control, provided their driving habits and risk profile make it a suitable choice.