What Is Excess in Car Insurance? Complete Guide for Dubai Residents

If you’re new to car insurance or renewing your policy, terms like “what is excess in car insurance” or “car insurance excess meaning” can feel confusing. Don’t worry—this guide breaks it all down! Learn how excess works in Dubai, when you pay it, and how to balance costs. Whether you’re a first-time driver or a seasoned pro, we’ll simplify everything you need to know.

What is Excess in Car Insurance– Simple Definition

The car insurance excess meaning is straightforward: it’s the amount you pay first when making a claim. Your insurer covers the rest. For example:

Example:
Accident repair cost = AED 5,000
Your excess = AED 1,000
Insurance company pays = AED 4,000

Key Facts:

• Called a deductible in some countries.
• Applies per claim, not per policy.

How Does Car Insurance Excess Work?

The car insurance excess meaning in Dubai is the same as elsewhere in the UAE. No matter how many years you’ve spent on the road, getting involved in any accident, whether a minor dent or a major collision, is occasionally inevitable. In such an event, your excess amount of car insurance determines whether or not you can raise a claim for those accidents.

For instance, if your insurance policy’s excess is less than the repair costs (let’s say your excess is 500 AED and you had an accident that costs 1000 AED to repair your car) you pay your insurer the amount of your excess, and your insurer takes care of the rest.

However, if your excess is more than the probable repair costs (for example, you hit another car’s bumper and caused a small scratch), paying out of your pocket is best. At least that is the more intelligent financial decision if you’re still wondering about motor insurance’s excess meaning, or what excess means in car insurance, stay with us!

How Does Car Insurance Excess Work in Dubai?

In Dubai, excess rules differ slightly:

• Applies only to comprehensive policies (third-party policies exclude it).
• Pre-set amount: Typically AED 500–2,500.
• Pay even if not at fault – unless the other driver is identified and fully liable.
• Hit-and-run? You’ll still pay excess for own-damage claims.

What is the Purpose of Excess in Car Insurance?

So far, we answered “What is excess in car insurance?” and “How does car insurance excess work?”. Now, it’s time to explain the purpose of excess in car insurance. In case you experience a serious accident that causes major damage and injuries to your vehicle or someone else’s, an insurance excess saves you a significant amount of money.

In some severe cases, drivers paid only one-fifth of the repair costs, since they had an insurance excess agreement. Plus, this method reduces the number of low-value claims and reduces the risk profile on your insurance history. Before finalizing your insurance purchase, learning how the excess works is important. Also, we suggest reading about how auto insurance deductibles work as an important related topic that can help you reduce costs and choose the best insurance. This will lead to choosing a more affordable provider with the right services.

Why Should You Have Excess in Car Insurance?

One of the main reasons why you should get vehicle insurance excess is to reduce your overall spending. But what does paying excess insurance mean? Getting a higher excess rate reduces your premiums, resulting in savings on your total insurance costs. This is even more beneficial if you have a low-risk profile with little to no claims. It means you use your coverage less often, leading to lower premiums in the long run.

Insurance excess protects you from the financial consequences of accidents, lawsuits, and successful claims. Also, it covers your funds in case your policies aren’t enough to meet them.

Now, you may be wondering, how probable is it to get a lawsuit? Well, it’s more likely than you think. Car accident injuries make up many lawsuits filed against the average person. Another reason for excessive agreements is expensive medical emergencies resulting from car accidents.

Types of Excess in Car Insurance UAE

Learning about the difference between types of excess helps you realize which one applies to you. Also, this leads to choosing a more suitable policy for yourself. Compulsory and voluntary are the two main types of insurance excess. Sometimes, you might need temporary car insurance while issues with your main car or primary coverage get settled.

Let’s take a more careful look at the car insurance excess meaning and the elements they carry:

Standard (Compulsory) Excess

Now that you have found the proper answer to “What is the meaning of excess in car insurance?” It’s time to learn more about compulsory excess. The compulsory excess in car insurance means the amount of money you should pay to your insurance provider towards a claim before the process begins. This depends on different factors such as age, your claim, your car, and your experience. Let’s take a look at these important factors:

• Fixed by your insurer based on:
  • Car value
  • Driver age (under 25? Expect higher rates!)
  • Claim history 📋

Voluntary Excess

Now that the excess in car insurance is explained, the meaning of voluntary excess in car insurance might be a bit more apparent. A voluntary excess is the amount you agree to pay your insurance provider towards any claims you make in case of an accident. Your voluntary excess amount is decided when you renew your insurance or purchase a new vehicle. This is in addition to the compulsory excess.

• You choose this amount to lower your premium.
• Higher voluntary excess = Cheaper yearly insurance.

Young Driver Excess in Car Insurance

Also known as Young Driver excess, age is important in calculating your excess. Any driver under the age of 25 is considered a young driver. In this case, an excess regarding your inexperience applies to your insurance policy. This is due to all the possible risks that come with age and little experience. This type of excess also applies to new drivers. After the said age, this excess expires and no longer applies to you. Also, having a 2-year experiment in driving reduces this excess.

• Extra AED 1,500–3,500 for drivers under 25.
• Why? Stats show younger drivers file more claims.

Don’t miss out on our guide on no claim bonus in motor insurance since it will help you save a lot on your insurance. When choosing a voluntary excess, you should pay attention to the factors mentioned below:

Car Insurance Dubai – How Excess Affects Your Policy

In Dubai, excess in car insurance isn’t optional for comprehensive policies—it’s required by law. Here’s the trade-off:

Lower excess = Higher annual premiums (you pay more yearly).
Higher excess = Lower premiums (but bigger out-of-pocket costs during claims).

Your claims

The type of claim you make affects your excess. Minor claims usually get lower excess, and vice versa.

License history and experience

Your experience as a driver is also significant. Having fewer claims also affects your insurance excess.

Unreliable repairs

If a specific unreliable or unapproved mechanic fixes your vehicle, you might have to pay a higher excess. Of course, you are the one who chooses where you want to fix your car, but if it is not an approved garage, your insurer will charge more for excess since they believe it takes more to repair your vehicle.

Fire and theft

If your claim concerns fire and theft, your insurer might reduce your excess. This solely depends on the type of policy and the provider you choose. However, some providers reduce excess amounts for such accidents. These factors determine the compulsory excess of car insurance.

Cost

The higher your voluntary excess, the lower your insurance premium. Therefore, it is important to manage your excess rate. Moreover, once you make a claim, as a policyholder, you should pay both compulsory and voluntary excesses.

Financial circumstances

Choosing a voluntary amount should depend on your financial situation. Remember that once you make a claim, you will have to pay the amount you agreed on. Therefore, always choose an amount that will be possible for you to pay.

Your insurance provider’s approval

Your insurer needs to agree with your excess. Therefore, it is necessary to work out an amount that works for you while getting the approval of your insurer.

Age

Yet again, the age factor plays a big role in this type of excess as well. If you are a young and low-experienced driver, under the age of 25, you can’t reduce your excess since you are considered high risk. This is not related to driving skills and it is solely based on experience.

When Do You Pay Excess on Car Insurance?

Now, you know the exact meaning of excess car insurance. You should also consider that insurers are different from one another. Some of them might ask you to pay upfront while others might land you the total bill after the claim.

However, insurance excess is paid only when making a claim. Also, claiming someone else’s insurance doesn’t require you to pay excess. Meaning, that you only pay excess regarding damage to your vehicle.

Plus, only when the accident is your fault and you have caused it. If someone else has caused it, you raise a claim on their insurance. Therefore, you pay the excess in the event of the claim. In case of having both voluntary and compulsory excess, you will have to pay both of them at the same time. The total will be reduced from your total.

In short:

You’ll pay excess only if:

• You file a claim for your own car’s damage (e.g., collision, fire).
• The repair cost exceeds your excess amount.

You WON’T pay excess if:

• The repair bill is lower than your excess (e.g., AED 300 scratch with an AED 500 excess).
• You pay out-of-pocket instead of claiming.

How Much Excess for Car Insurance?

The overall amount of your insurance excess is a combination of the different types of excess you get (compulsory and voluntary) however, the exact amount differs and insurers have their unique policies.

Therefore, checking with your provider and inspecting specific insurance policies help you determine whether the price of an excess is suitable for you. Pay attention to all the details we mentioned in this article to pick the right policy for yourself. It is important to choose an excess that you can end up affording. These might help you determine what is an excess amount in car insurance.

Can I Reduce My Car Excess? Mastering Excess in Car Insurance

As we discussed earlier in this article, reducing your vehicle insurance excess is sometimes possible. However, it will usually lead to an increase in your premiums. Your premiums typically depend on your age, driver’s license, type of car you drive, and its value in the market. However, a reduction in your excess will result in higher premiums, all affecting your total insurance costs. It is mainly your circumstances that determine whether or not it is a good idea to reduce your excess.

Nevertheless, if you can afford higher premiums and have the right income, reducing your excess might not be a bad idea. Plus, if you spend a lot of time driving and you use your vehicle frequently, the probability of an accident is higher for you.

That said, it is always important to choose an amount that is right for you. However, we recommend higher excess since it is usually more practical for most drivers in the long run. There are several different methods to reduce your vehicle insurance excess if you end up making that decision. Let’s go over a few of these ways:

Increasing your voluntary excess

Voluntary excess is the amount you pay when raising a claim. Therefore, increasing it reduces your premiums.

Get a more expensive Insurance plan.

Getting a more expensive insurance plan from the same insurer reduces your excess since you end up paying higher monthly or annual premiums.

Use your insurer’s discounts.

There are several types of discounts and offers that most insurers provide from time to time. Some of these discounts include multi-car insurance discounts or no-claims discounts. Pay attention to the ones that apply to you and take advantage of them.

Work on your credit score.

Credit history is important in the UAE, like in any other country around the world. Your insurers pay attention to your credit score and building a solid and reliable credit history helps reduce your excess.

Keep a good record

Your driving record is also very important when it comes to renewing your insurance or reducing your excess. Not having black points on your license, making few claims, and causing fewer accidents all add up, resulting in a good driving record.

We talked about car excess insurance and hopefully, answered the most important questions regarding excess in car insurance.

Many drivers don’t know exactly what they are paying for in car insurance excess. Therefore, they end up paying an unreasonable amount of money for a policy that is not very suitable for them in the end.

Final Thoughts – Smart Strategies for Car Insurance Excess in Dubai

Understanding car insurance excess meaning and how it works helps you save money and avoid surprises. In Dubai, always verify your policy’s excess terms and weigh voluntary vs. compulsory costs. For high-risk drivers, a lower excess may be safer, while experienced drivers can leverage higher excess for premium discounts. Use this guide to make informed decisions and protect your budget!

By using Lookinsure, you can compare and find the best insurance excess deals. Our support staff can help you determine what factors you should pay attention to and how to reduce excess based on your insurance needs. Keep in mind that your insurance excess depends on your personal driving history as well as your car’s features.

Frequently Answered Questions