What is voluntary excess on car insurance?
15/05/2024
Insurance can seem complicated if you haven’t had to take out a policy before, it uses a lot of jargon and terms that to the uninitiated can seem daunting. That’s where Quotezone is here to help, we have prepared a guide for you to get to grips with one of the fundamental pillars of car insurance….excess. What is car insurance excess? how does excess work? what is voluntary excess on car insurance? read on to find out the answers you’re looking for.
What is excess and how does it work?
Voluntary excess is the pre-agreed amount that the claimant (you) will pay to the insurer in order to get any future car insurance claim processed. This is in addition to the compulsory excess amount which is set by the insurer and also needs to be paid in order to process an insurance. The voluntary excess amount along with the compulsory excess amount is known as ‘total excess’, which is the total amount you need to pay to the insurer in order for them to process your claim.
Car insurance excess is also different to your car insurance premium which is simply the amount you pay in order to keep your car insured for the year. You will not actually pay any excess unless you need to make a claim.
This applies to all insurance types whether that be third-party or comprehensive unless specifically stated otherwise in your policy.
Why do I need to pay excess when making a car insurance claim?
The reason why insurers require motorists to pay excess for insurance claims is typically to put people off claiming for minor damages or cosmetic fixes. This helps insurers process claims for larger accidents and damages where the benefit of an insurance policy is most obvious.
Paying excess is also a useful tool against fraud and can act as a deterrent against small or unnecessary claims, helping keep overall car insurance costs down for the average motorist.
How much is voluntary excess?
The amount you pay as voluntary excess will vary depending on what you are comfortable paying in the event of an insurance claim. It is important to remember that car insurance excess is broken down into two types.
- Compulsory excess – Compulsory excess is to protect insurance companies from small claims and fraud. For example it’s unlikely that a claim for £50 worth of damage will be made when the excess to be paid is £200. Due to this insurers will require you to pay a compulsory excess when making a claim.
- Voluntary excess – Voluntary excess is the extra amount you volunteer to pay in addition to your compulsory excess in the event of a claim. The benefit of doing this is that your premiums can be reduced if you raise your voluntary excess amount which will save you money in the long run. The risk however is that in the event of you needing to make a claim you will need to pay the compulsory excess as well as the amount you volunteered in your policy.
Compulsory excess is the amount set by your insurer which you will need to pay in order to make a claim. Compulsory excess insurance can range anywhere from £50 to £750 in the UK. Voluntary excess is the amount you volunteer to pay on top of the set compulsory excess amount. Some motorists volunteer to pay a higher amount of excess as this can mean they are offered cheaper car insurance premiums.
Is it worth paying voluntary excess on car insurance?
This will depend on your own financial situation as the benefits of volunteering to pay a higher excess amount could lead to significant savings on your car insurance premium. The downside to paying more on excess is that in the event of a claim, you’ll need to pay the agreed amount in order for the insurer to process the claim.
You should be careful when considering what amount to pay as voluntary excess however, as if you do need to make a claim it is important that you can afford the agreed excess amount.
What is the best voluntary excess on car insurance?
Whilst there is no best voluntary excess amount that applies to all motorists, there are some factors you should consider when deciding on the right amount of voluntary excess to pay.
- Is the voluntary excess amount affordable?
- What will you save on your premiums with the proposed voluntary excess amount?
Your age, previous claims history, and overall risk profile will all impact the amount you can save from volunteering a higher excess amount. It is important to remember that you don’t need to opt for the highest voluntary excess amount in order to benefit from reduced premiums. You will also be required to the mandatory excess amount set by your insurer so consider this when deciding on a voluntary excess amount.
When do you pay excess on car insurance?
If you make a claim you will need to pay the compulsory excess amount stipulated in your policy in order for your claim to proceed. If you have volunteered to pay additional voluntary excess when taking out your policy then this amount will be added to the total excess you must pay to the insurer before they process your claim.
What affects my excess?
Factors such as your age, driving history and vehicle all come into play when insurers assess your compulsory excess. This can even include the location you live in and where you usually park your car. This is due to how insurers assess the risk of the person making a claim and hence costing the insurer money. A crucial factor that insurers will look at when assessing your excess is if you’ve been involved in an accident before since this naturally makes insuring you seem more risky. If you’re a young driver you are likely to pay a higher excess in the event of a crash as insurers will view you as statistically more likely to be involved in an accident. To save on your premiums it might be a good idea to look into telematic insurance.
What if I’m not at fault for an accident?
You will likely need to pay your excess regardless of who’s at fault, however if the other party admits liability and their insurer will cover the amount of the damage then you can request your excess be returned to you from your insurer. A crash in all likelihood will unfortunately raise your premiums however, regardless of whether your excess is repaid to you.
What does total excess mean on car insurance?
Your total excess is your combined compulsory and voluntary excess when you make a claim. You are not required to pay a voluntary excess amount but some motorists choose to in order to save on the cost of their car insurance premiums.
Top tips?
- Avoid making minor claims or getting into driving accidents.
- keep your car locked in a secure place to reduce the chance of theft.
- Volunteer to pay a higher excess if you feel you will not likely make a claim and want to reduce your premiums.
- Don’t immediately admit liability in an accident, tell the other party you need to first speak to your insurance.
This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.