What is a car insurance voluntary excess?
When you need to make a claim on your car insurance policy, the pay-out will usually be reduced by an amount known as an excess. There is usually a compulsory excess plus you can choose a voluntary excess which can help reduce the cost of cover. Find out what an excess is and how to decide what voluntary excess you should choose with our five-minute guide
What is car insurance excess?
When you take out car insurance, your policy documents will include something known as the level of your excess. The excess is simply the amount of money you agree to pay towards the cost of any claims you make.
Your excess is usually made up of two parts:
Compulsory excess: The amount is set by your insurer and is non-negotiable
Voluntary excess: The amount is chosen by you and is paid on top of your compulsory excess if you need to claim. The higher the excess you choose, the cheaper your monthly premiums should be.
For example, if your compulsory excess is £150 and your voluntary excess is £100, when making a claim worth £1,000, the insurance company would keep £250 for the excess and pay you the remaining £750.
Do I pay excess on car insurance if the accident wasn’t my fault?
If you are caught in an accident which was caused by another driver, then your insurance company will probably chase a claim against the other driver’s insurance policy. That will mean you won’t have to pay an excess on the claim.
However, if repairs to your vehicle cost less than the excess you have on your policy, then you likely won’t be able to claim on your insurance and will need to cover the cost of the repairs yourself.
Unless you have legal expenses cover, you will also normally have to cover the cost of any legal action you may need to take after an accident that wasn’t your fault.
If your car insurance is a third-party policy, any losses you experience through an accident caused by another driver will not be covered, so no excess will come into effect.
What is voluntary excess?
Voluntary excess is the amount of money you choose to pay towards any car insurance claim, on top of whatever compulsory excess amount the insurance company may have set.
You can actually choose to set your voluntary excess at zero if you wish, effectively meaning you will only have to pay the compulsory excess towards any claim. But that would push up the cost of premiums as lower the excess you agree, the more your insurance company will charge you for cover.
In short, having a higher voluntary excess can make car insurance more affordable. Most insurers allow you to increase your voluntary excess up to certain levels, which can be as much as £1,000. However, bear in mind that while agreeing such a high excess will mean lower monthly premiums, it will also mean that you will have to pay the first £1,000 of any claim. It effectively means you won’t be able to claim for small accidents where the cost of repairing the damage is less than £1,000 plus the compulsory excess.
What is compulsory excess?
A compulsory excess is the sum set by your insurer that you must pay towards any claims. It is non-negotiable and is based on a variety of factors including your age, the type of claim you’re making, and the type of car you drive.
The compulsory excess is added to your voluntary excess if you need to make a claim. You should be able to find the amount stated in your policy documents.
How much voluntary excess should I pay?
The amount of voluntary excess you should add to your policy depends on how much you can afford to shell out if you need to make a claim.
While choosing a higher voluntary excess will help to reduce your premium, you need to be sure that if you have to make a claim, you can afford to pay the compulsory excess, plus the voluntary excess on your policy.
When you run a quote on MoneySuperMarket, you’ll be asked how much voluntary excess you wish to add to your policy. The resulting list of quotes will show the total excess (compulsory and voluntary) that you’ll have to pay if you make a claim.
You can then alter the voluntary excess to see how it affects the price you pay.
Should I increase my voluntary excess?
In theory, the higher your voluntary excess, the less your car insurance will cost. But it’s always worth seeing how much you would pay with a £0 voluntary excess.
As pointed out above, you also need to consider how much you could afford to pay if you are in an accident or your car is stolen. While you can set the level of your voluntary excess when buying your policy, you can’t change it if you need to make a claim.
So if you have to make a claim then you’ll need to cover both the voluntary excess and your compulsory excess. If you are unable to afford to cover the excesses, your insurer will not pay out for the rest of the claim.
Why does increasing my voluntary excess reduce car insurance premiums?
Agreeing a higher voluntary excess will often cut the cost of your car insurance. Increasing your voluntary excess from £0 to £250, for example, could save you around 5% on your monthly premiums.
Insurance companies offer discounts to people who agree to pay higher excesses for two reasons:
Agreeing to a higher excess suggests you will not make low-value claims
Crucially, if you do need to make a claim, the amount the insurer has to pay out is lower
Can I change my voluntary excess?
You choose the level of your voluntary excess when you take out a car insurance policy. Most insurers will let you set it at anything from £0 to £300 or even up to £1,000.
But you can’t change your voluntary excess when you make a car insurance claim. That’s why it’s important to choose the right amount that you know you can easily afford to pay if it comes to it.
Can I change my compulsory excess?
The compulsory excess is set by your insurance company so you won’t be able to change it. The insurer works it out using your risk profile, which is based on a range of factors such as your age and driving experience.
If you’re a young, inexperienced driver, your compulsory excess is likely to be quite a lot higher than someone who's been driving for a while and has built up a good deal of driving experience.
The compulsory excess included on your policy is also likely to be higher if you choose to drive a valuable or high-performance vehicle such as a sports car.
Can I insure my excess payment?
Excess insurance is designed to cover the cost of the excess you pay if you make an insurance claim. The amount that can be paid out is set at the outset and is usually enough to cover both your voluntary excess and your compulsory excess.
It can only be taken out alongside at least one existing insurance policy, and can cover just your car insurance, or a range of policies including home, travel or pet insurance.
The maximum amount you can claim can be anything from £250 to £1,000 per year, depending on the terms of your policy. But whatever the amount, it will only be released once you have provided evidence that you have made a successful claim on your insurance.
The cost of excess insurance depends on the amount you can claim, as well as whether or not it covers more than one policy. For single policy excess insurance, costs start at around £30 a year. For so-called lifestyle excess insurance that covers several different polices, you will often have to pay £70 or more.
Compare car insurance quotes
Comparing car insurance quotes with MoneySuperMarket is a quick and easy way to find affordable cover. All you need to do is tell us a little about yourself, the car you’re insuring and your driving history, and we’ll put together a list of quotes tailored to your needs.
You’ll be able to compare policies by the cost and coverage you’ll get, as well as the excess you’ll need to pay if you make a claim. Once you’ve found the deal you want, just click through to the provider to finalise your purchase.
