Motor Excess Insurance in 2025: How to Cut Premiums Without Risking Big Payouts

Motor Excess Insurance: Why It Makes Sense in 2025

Let's face it – car insurance is one of those grudge purchases. You need it legally, but you hope you never have to use it. And if you do? You're often hit with an excess fee that can sting, especially if you've bumped it up voluntarily to get a cheaper quote.

That's where motor excess insurance steps in. In 2025, with rising premiums and repair costs, more drivers are turning to this lesser-known type of protection. It might not have the headline appeal of comprehensive cover, but it can be a financial lifesaver when you need it most.

What Is Motor Excess Insurance?

In simple terms, motor excess insurance reimburses you for the excess you have to pay when you make a claim on your standard car insurance policy.

There are usually two types of excess:

Compulsory excess – set by your insurer, often depending on the kind of driver you are or your vehicle.
Voluntary excess – the amount you choose to pay in addition to the compulsory excess, often to bring down your premium.

If you make a claim, you must pay both. That could easily mean hundreds of pounds out of your pocket – even if you're not at fault. motor excess insurance 2025

Excess insurance steps in after the fact, refunding you what you paid (up to your chosen limit).

Why It Matters More in 2025

Here's a clearer version of the text:

Let's examine the trends in car insurance:

Firstly, the good news. Car Insurance premiums have come down this year.

According to Confused.com, the average car insurance policy in the UK in 2025 currently costs £777. This is a 17% drop from 2024, or about £164 less per policy.

For context, the peak annual premiums came in the final quarter of 2023, where the average yearly premium was £995.

So, whilst there is a downward trend, the annual costs remain stubbornly high.

Main contributors to this include:

Repair costs have increased over the last few years due to the growing complexity of vehicle technology, including features like sensors, electric vehicle (EV) batteries, and digital systems.
Voluntary excesses are rising as drivers look to claw back savings on premiums.

In short? You're more likely than ever to agree to a higher excess. But if you need to claim, that saving could suddenly backfire.

A Real-Life Example

At Total Loss Gap, we recently explored how raising voluntary excess can reduce premiums. In one test case, a driver saved 27% on their annual insurance quote simply by increasing their voluntary excess from £250 to £500.

Here's the thing:

That saving only helps if you don't make a claim.

But if you do? You're £500 out-of-pocket before your insurer even picks up the rest of the bill.

Read the original story here: One simple trick that saved us 27% on our motor insurance premium quote.

That's exactly where motor excess insurance earns its keep.

Key Benefits

Let's break down the main reasons why excess insurance is worth considering:

Financial Protection: Reimburses the excess amount if you make a claim.
Peace of Mind: Removes the stress of wondering if a higher voluntary excess will come back to bite you.
Multiple Claims: Most policies cover more than one claim per year (up to your annual limit).
Covers Theft & Write-Offs: Even if your car is stolen or written off, you can still claim back your excess.
Affordable Premiums: Policies often cost between £14.99 and £49.99 per year – significantly less than the excess they protect.

Who Should Consider It?

Motor excess insurance makes particular sense for:

Drivers who've increased their voluntary excess to save on premiums.
Young drivers or high-risk groups face high compulsory excesses.
Anyone driving expensive or new vehicles, where repairs can cost more.
Fleet drivers, delivery workers, or regular commuters are more likely to face incidents.

If your excess totals £500 or more? It's a no-brainer.

What Does It Cover?

Most standard excess insurance policies will:

Cover between £300 and £1,500 worth of excess annually.
Reimburse for both fault and non-fault claims.
Include multiple incidents during the policy year.

However, it usually won't cover:

Windscreen or glass-only claims.
Wear and tear or mechanical failure.
Incidents outside the policy's territorial limits (e.g. some countries abroad).

Always read the terms.

How Claims Work

The process is generally straightforward:

You make a claim on your standard car insurance.
You pay the total excess (compulsory + voluntary).
Once settled, you submit proof of the claim and excess payment to your excess insurer.
They reimburse you, typically within a few weeks.

Remember to keep documentation, including your excess amount paid and the insurer's settlement letter.

Pair It With a Voluntary Excess Strategy

Here's the smart move for 2025:

Raise your voluntary excess to bring your premium down – but offset the risk with a low-cost excess insurance policy.

You get the best of both worlds:

Lower upfront insurance costs.
Full protection in case you actually need to claim.

Think of it like hedging your bets.

Final Thoughts

Car insurance isn't getting much cheaper anytime soon. And while voluntary excess can reduce premiums, it brings new risks if you need to make a claim.

Motor excess insurance is a smart, affordable way to protect against those risks. It might not be glamorous, but it does what you want your insurance to do: make sure you're not left out of pocket when things go wrong.

And in 2025, with rising costs across the board, that kind of backup plan makes sense.

Useful Link:

One simple trick that saved us 27% on our motor insurance premium quote

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