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There are two types of car insurance excess – a compulsory excess and a voluntary excess. Understanding the difference is important as you will need to pay the total excess if you make a car insurance claim. This guide takes a detailed look at how voluntary excess works.
What is the voluntary excess?
The voluntary excess is a sum of money that you agree to pay towards the cost of a car insurance claim. You pay the voluntary excess on top of the compulsory excess, which is set by your insurer.
Car insurance is designed to cover the more expensive claims you might struggle to pay for yourself. The excess is there to prevent drivers from making lots of claims for minor damage and help deter fraud.
Choosing a higher voluntary excess means you’ll have to pay more overall in the event of a claim. But it also means you’ll pay less for your car insurance.
How does it differ from compulsory excess?
The compulsory excess is an amount set by your insurer and it cannot be changed. It must be paid if you make a car insurance claim and the amount should be stated in your car insurance policy documents.
If you’re a new, inexperienced driver, you might pay a higher compulsory excess compared to someone who has been driving for a while. That’s because younger drivers are viewed as higher risk and more likely to be involved in an accident.
The voluntary excess, on the other hand, is an optional, flexible amount you can add on top of the compulsory excess to help reduce the cost of your car insurance.
For example, if you had a compulsory excess of £200 and you chose a voluntary excess of £500, you would need to pay £700 in total if you made a claim. If your claim was for £1,000, your insurance provider would pay the remaining £300.
Alternatively, if your compulsory excess was £200 and your voluntary excess was £50, you would only need to pay £250 in the event of a claim. If your claim was for £1,000, your insurance provider would pay £750. However, your insurance premiums would be higher in this case compared to the first example.
Do all insurers offer a voluntary excess?
Yes, all insurers offer a voluntary excess. But it’s optional so you can set it to £0 if you prefer. Just remember that this will mean you’ll pay more for your car insurance.
If you want to keep your car insurance costs down, paying a higher voluntary excess will help. But it’s crucial to make sure your total excess is affordable as you will need to pay the full amount if you claim.
When you compare car insurance quotes, you can alter the voluntary excess amount to see how it affects your premium. You can then select the option you’re most comfortable with.
Generally, you’ll save around 5% to 7% on your car insurance premiums by increasing your voluntary excess from £0 to £250.
As an example, we ran some quotes for a 20-year old driver insuring a 2014 BMW Active Tourer. The table below outlines how the quotes differ depending on the cost of the excess:
When do you pay the excess?
This will depend on the insurer so make sure you check. In some cases, you might be asked to pay the excess immediately to start a claim. In other cases, the excess will be deducted from your repair bill instead, meaning you pay it at the end of the claims process.
If you are involved in an accident that wasn’t your fault, you will still need to pay the excess. But if your insurer can prove that the accident wasn’t your fault, it might try to recover the cost from the other party’s insurance provider. If successful, the money will be refunded to you.
What are the pros and cons of a voluntary excess?
The main advantage of a voluntary excess is that it can help cut the cost of your car insurance premiums. This can be particularly beneficial if you’re a new driver or if you’re classed as high risk for other reasons such as having a driving conviction. You’ll have the flexibility to choose the level of voluntary excess that suits you.
However, some of the drawbacks include that your insurer won’t usually pay out for a claim that costs less than your excess. Be sure to remind yourself of your excess costs before starting the claims process so that you don’t get caught out.
It might also not be worth claiming if your excess is close to the claim amount. For example, if your total excess was £600 and you were making a claim for £700, you might be better off paying the total cost of £700 yourself rather than risk losing any no claims bonus you might have.
Note that, even if you don’t claim, you still need to inform your insurer of any incidents.
Bear in mind also that if you’re in involved in an accident and the other party does not have car insurance, you might still have to pay the excess, even if the accident wasn’t your fault.
Finally, if you are unable to cover your voluntary excess when you make a claim, your insurer could refuse to pay out. It’s therefore crucial to ensure your excess is affordable when applying for car insurance.
