What is car insurance voluntary and compulsory excess?
When make a claim on your car insurance, the pay-out will usually be reduced by an amount known as an excess. Find out here what an excess is and how to decide what voluntary excess you should choose.
Key takeaways
There are two parts to your car insurance excess: compulsory and voluntary.
The excess is simply the amount of money you agree to pay towards the cost of any claims you make.
Choosing a higher voluntary excess can save you money on your premium, but you'll have to pay more out of pocket if you need to make a claim.
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 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.
An excess is in place to stop very small claims for minor things like bumps and scrapes. Insurance is only meant to be for larger claims, while you are expected to pay for minor repairs to your car yourself.
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, although different policies with the same insurer may have different values of excess, 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.
What is voluntary excess?
On top of a compulsory excess, you can choose to have a voluntary excess. In the event of a claim, this will be combined with the compulsory excess to make up the amount you will have to pay before the insurance kicks in.
This can be particularly helpful if the quoted premium is more than you can afford, as increasing the excess should bring down the cost of the insurance. However, there are reasons you might want to be wary of lifting it to too high a level which will be explained below.
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
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 both excesses 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. It is always worth checking how much the policy would cost if you set the voluntary excess to £0 – if you can afford it, this would make sure you are covered as much as you can be if your car was to be damaged or stolen.
It’s also worth remembering that you can’t change your voluntary excess down the line if you need to make a claim, so make sure to consider it carefully at the point you buy your policy.
When do you not pay excess on car insurance?
You usually do have to pay the excess on your policy if you make a claim, regardless of where the blame for any incident lies. However, insurers will usually agree to waive it if it can be proved that the blame lies with the other party. This is because they will be able to recover the amount from the other motorist’s insurer.
You also will not have to pay the excess on claims made by a third party, as an excess specifically covers claims made by you.
If you are involved in a crash with an uninsured driver, unfortunately, you will usually have to pay the excess, even if it was that person’s fault. This is why uninsured drivers push up costs for everyone.
When do you pay excess on car insurance?
If you are involved in an accident that is your fault, or you cannot claim from the other driver – perhaps because they are uninsured or you do not know who caused the damage – then you will need to pay the excess.
Your insurer will either ask you to pay the amount upfront when you make a claim, or you may be asked to pay at the end of the process when you receive any payout.
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.
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 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 typically start at around £30 a year. For so-called lifestyle excess insurance that covers several different policies, 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.
