What Is Voluntary Excess?
First things first: voluntary excess refers to the amount of money you agree to pay towards a claim before your insurance kicks in. It’s an additional sum on top of the mandatory excess, which is set by the insurer and is based on factors like your age, driving history, and the car you drive.
So, imagine you’ve had a little “oops” moment—say, you scratched another car while parking. Your insurance company will cover most of the repair costs, but before they do, you’ll need to pay a set amount first. This is where your excess comes in.
Here’s the kicker—voluntary excess is the amount you choose to pay on top of the mandatory excess. It’s your decision how much to set, and it can make a big difference in your premium.
Why Would You Choose a Voluntary Excess?
Great question. Let’s say you’re trying to lower your monthly premium and make your insurance more affordable. One way to do that is by increasing your voluntary excess. It’s like saying, “I’m willing to pay a bit more out of pocket if I need to make a claim, but in exchange, you (the insurer) can lower my premium.”
Here’s how it works:
- Lower Premiums: By increasing the voluntary excess, you lower your overall insurance premium. In short, you pay less each month for coverage.
- Risk vs. Reward: You’re agreeing to take on a little more risk yourself. If you have to make a claim, you’ll pay more upfront (voluntary excess), but your insurer will take care of the rest.
- You’re In Control: You get to choose how much voluntary excess you’re comfortable with. This gives you some control over how much you pay monthly vs. how much you pay if something goes wrong.
Is It Worth Increasing Your Voluntary Excess?
Increasing your voluntary excess can be a smart way to save money, but it’s not always the best choice for everyone. If you’re the type of person who prefers knowing exactly what you’re paying each month and don’t mind a higher premium, then sticking to a lower voluntary excess might be the way to go.
On the other hand, if you’re okay with covering a higher amount in the event of a claim and want to keep your monthly costs down, raising your voluntary excess might be a solid option.
Pro Tip: If you do increase your voluntary excess, make sure you can afford to pay it if the worst happens. After all, you don’t want to be left scrambling for cash if you need to file a claim.
How Much Should Your Voluntary Excess Be?
The amount of voluntary excess you choose is entirely up to you, but there are a few things to consider:
| Factor | What It Means for Your Excess |
|---|---|
| Your Driving History | If you’ve had accidents or claims before, you may find that insurers will set a higher mandatory excess, but you can still adjust the voluntary portion. |
| Car Type | High-performance or luxury cars often come with higher insurance premiums. Increasing your voluntary excess can help balance out these costs. |
| Your Risk Tolerance | The more risk you’re willing to take, the higher your voluntary excess can be. Just make sure it’s not so high that it’s unaffordable in the event of a claim. |
| Monthly Premiums | A higher voluntary excess will typically lower your monthly premiums. If you’re looking to save on a tight budget, this could be a good route. |
Most insurers allow you to choose a voluntary excess between £100 and £500, but it can sometimes go even higher depending on the specifics of the policy. A higher excess means a lower premium, but a higher upfront cost if you need to claim.
Should You Choose a Higher Voluntary Excess?
Now, let’s talk about the benefits of choosing a higher voluntary excess.
- Save on Your Premiums: The main advantage is reduced monthly premiums. If you’re on a budget or don’t mind paying a bit more upfront in case of a claim, this can be an effective way to save.
- Good for Experienced Drivers: If you have a clean driving record and feel confident about your driving skills, opting for a higher voluntary excess might be worth considering. It’s a way to reward your safe driving habits with lower premiums.
- Control Your Insurance Costs: You can tailor your insurance policy to fit your personal budget and preferences. If you can handle a larger excess in the event of an accident, you can significantly cut down your monthly costs.
When Should You Keep Your Voluntary Excess Lower?
While increasing your voluntary excess can be beneficial for some, it’s not always the right choice. Here’s when you might want to keep it low:
- New Drivers or Young Drivers: If you’re a new or young driver, you might not want to risk paying a larger excess. In this case, it’s often better to keep the voluntary excess lower, even if it means paying a slightly higher premium. This gives you peace of mind, knowing you won’t be hit with a large bill if something happens.
- Older Cars: If you’re driving an older car, you might not want to risk a higher excess. Older cars tend to have more wear and tear, and you may be more likely to have issues or claims. A lower voluntary excess ensures you’re not caught off guard by large out-of-pocket costs.
- If You Can’t Afford a Higher Excess: This is crucial—if you can’t afford to pay the higher excess in the event of a claim, it’s probably best to keep it lower. The goal is to save money without creating a situation where you’re financially unprepared if something goes wrong.
Final Thoughts: Should You Increase Your Voluntary Excess?
In the end, the choice is yours. Voluntary excess on car insurance can be a clever way to save money on premiums, especially if you’re comfortable with the idea of paying a little more in the event of a claim. However, it’s important to assess your own risk tolerance and financial situation.
Before making any decisions, think about how much excess you could realistically afford to pay if something happened. If the higher voluntary excess feels like a manageable risk, go for it and enjoy the savings. But if you’d rather pay a bit more each month for peace of mind, there’s no harm in keeping it lower.
It’s all about finding the balance between what works for your budget and your sense of financial security.
Frequently Asked Questions (FAQs) about Voluntary Excess on Car Insurance
1. What is the difference between voluntary excess and mandatory excess?
The mandatory excess is the amount set by your insurer, usually based on your age, driving history, and car type. The voluntary excess is the extra amount you choose to pay on top of the mandatory excess to reduce your monthly premium.
2. Can I change my voluntary excess later?
Yes, you can change your voluntary excess during your policy renewal or when you update your policy. Keep in mind that altering it may affect your premiums.
3. How do I know if I should increase my voluntary excess?
If you want to reduce your monthly premiums and feel comfortable paying a higher excess in the event of a claim, increasing your voluntary excess can be a good idea. Just make sure it’s not so high that it becomes unaffordable.
4. Is it risky to have a high voluntary excess?
The risk of having a high voluntary excess is that you’ll need to pay more upfront if you need to make a claim. If you’re confident in your driving and can afford the excess, it may be worth it. But if you’re unsure, it’s safer to keep it lower.
