Should you get excess insurance?

Pros and cons

Pros

• Cuts the cost of claiming

• Protects against hire car excess

• Cheap if you shop around

Cons

• Conditions and exclusions apply

• You may not need cover

• It can be expensive*

*If you buy from a car rental company, or don't compare policies

What does it cover?

It covers the cost of:

• Insurance policy excesses, like your motor or home cover

• High excesses charged by hire car companies

Excess insurance can cover compulsory and voluntary excesses on a range of insurance policies.

You will need to agree an excess limit before you take out cover. The higher your limit, the more you pay for cover.

Here is more about what excess insurance does and does not cover

Does an excess policy automatically cover any insurance?

No, you need to list the insurance you want to cover on your excess policy documents. You can give details to your excess insurance provider over the phone, or by completing a quote online. They may also ask for copies of your policy documents, as proof of your excess.

Is it worth the cost?

It depends on how high your excess is and the cost of an excess insurance policy. For example, some can cost as little as £2 a month, but others are more expensive.

Weigh up the price of an excess policy against the cost of paying your excess. If it is cheaper to pay your excess, don't pay out for cover.

Do you need it?

Hiring a car

If you hire a car, excess insurance could save you a lot of money.

Hire car companies can apply a £1,000 excess while you are renting a vehicle. This means you would have to pay for any damage up to the value of £1,000. But if you have excess insurance, it would cover this cost for you.

However, make sure getting cover from a separate excess insurer does not break the terms of your hire agreement.

Do hire cars come with insurance?

Yes, but they usually come with a high compulsory excess, e.g. £1,000. This means you may have to pay to repair damage to the hire car that costs less than the excess.

Other types of insurance

Excess insurance could save you a lot of money if you have a high compulsory excess.

For example, you may have to pay a high theft excess on your motor insurance, or for subsidence claims on your home policy.

If you are a new or young driver, you may also face higher compulsory excesses because you are more likely to make a claim.

What type should you get?

The three types of excess insurance you can choose from are:

• Car hire: This covers you for rental vehicles where high excesses apply. You can take out cover on a daily or annual basis, depending on how long you are hiring the car for.

• Single policy: This covers the excess on one insurance policy, like your car or travel insurance. This is best if you have insurance with a high excess to save on your premium.

• Lifestyle policy: This covers the excess on a range of insurance policies, like your car, home and travel insurance. This is usually the cheapest way to cover all your policies, but there will be a total cap on how much you can claim for.

How to find the right cover

Shop around to find the right cover at the cheapest price. You should check:

• The claim limits, which need to be enough to cover your excess

• The price, which needs to be less than your excess to be cost effective

• Whether the policy is annual, or runs daily (e.g. for hire car cover)

• If worldwide cover applies, particularly for car or travel insurance

• The exclusions, so you know what you can claim for