Six in ten drivers don’t fully understand insurance excesses
Other insurance terms equally misunderstood
Car insurance is a minefield even for those who know what they’re doing, but new research shows that as many as six in ten UK drivers are clueless about how insurance excesses work. The lack of understanding around terms such as “compulsory” and “voluntary” excess could, according to industry experts, lead to unexpected costs for drivers if they need to make a claim.
The survey of 2,000 adults found that only 39 per cent of drivers fully understood what “compulsory excess” means and the same proportion were clear about the term “voluntary excess.” Younger drivers, aged 16 to 24, were the least informed, with just 13 per cent saying they fully understood both terms, compared to 57 per cent of those aged 55 and over.
So, what’s the difference? Compulsory excess is set by the insurer and can’t be changed; it’s the minimum amount you are required to pay towards a claim. Voluntary excess, on the other hand, is an additional amount that you choose to pay, which can help lower your premium but increases your out-of-pocket expense if you need to make a claim.
Opting for a higher voluntary excess might lower your insurance premium, but it also means you’ll need to pay more if you make a claim.
“Excess clearly remains a misunderstood aspect of insurance — and as it can have a considerable financial impact in the event of a claim, this is worrying,” explained Tom Banks, spokesperson for comparison website Go.Compare, which conducted the survey. “While no one wants to spend more time or money when buying a policy, it’s important to make sure that you understand the terms and details of your policy.”
Banks also warned against being tempted by lower premiums without considering the implications: “It can be tempting to opt for an insurance policy with a higher compulsory or voluntary excess in the hope that it will bring down the cost of your premiums, but it’s vital to ensure that you can afford to pay the excess you are committing to.”
The research didn’t stop at excesses. It also found that over 70 per cent of drivers didn’t fully understand “policy exclusion,” a term that outlines what isn’t covered by a policy. Similarly, 61 per cent admitted to confusion over “personal accident cover,” while terms like “legal assistance” (62 per cent) and “additional excess” (69 per cent) were also widely misunderstood.
Banks advised drivers to take the time to read the small print and ensure they know what they’re signing up for. “Before purchasing insurance, it’s important to do your research and pay attention to the fine print – including the limits of the policy cover, the excess levels and any exclusions in place,” he said. He also recommends comparing policies to ensure you find the right level of cover, with excesses that you can afford to pay for should you have to make a claim.
Ultimately, this research shows that many drivers may not be as informed as they think about their insurance policies. Taking the time to understand your policy, including excesses and exclusions, can save you from unexpected costs and stress when it matters most.
| Motor insurance term | Percentage who don’t fully understand the meaning | |
| 1 | Policy exclusion | 71% |
| 2 | Additional excess | 69% |
| 3 | Legal assistance | 62% |
| 4 | Compulsory excess | 61% |
| 5 | Voluntary excess | 61% |
| 6 | Personal accident cover | 61% |
| 7 | Social, domestic and pleasure | 58% |
| 8 | Driving other cars | 58% |
| 9 | Protected no claims | 56% |
| 10 | Third party, Fire and Theft Cover | 54% |
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