Car insurance in the UK can sometimes seem complicated, with many terms and conditions that affect how much you pay and what happens if you need to make a claim. One of the key terms you’ll come across is voluntary excess.
But what exactly does it mean, and how does it impact your car insurance policy? In this guide, we’ll explain voluntary excess in detail, including its benefits, drawbacks, and how to decide the right amount for your policy.
Understanding Excess in Car Insurance
Excess in car insurance refers to the amount of money you agree to pay out of your pocket towards a claim before your insurer covers the rest. There are two main types of excess:
- Compulsory Excess – This is the amount set by the insurer, and you must pay it when making a claim. It varies based on factors such as your age, car type, and driving experience.
- Voluntary Excess – This is an additional amount that you choose to pay on top of the compulsory excess. It is optional and set by you at the time of purchasing the policy.
How Does Voluntary Excess Work?
When you make a claim, your total excess will be the sum of your compulsory excess + voluntary excess. Here’s an example:
| Type of Excess | Amount |
|---|---|
| Compulsory Excess | £300 |
| Voluntary Excess | £200 |
| Total Excess Payable | £500 |
So, if your repair costs are £1,500, you would pay £500, and your insurer would cover the remaining £1,000.
Benefits of Choosing a Voluntary Excess
Opting for a voluntary excess can offer several advantages, such as:
- Lower Premiums – Increasing your voluntary excess usually results in a lower insurance premium since insurers see you as a lower-risk policyholder.
- More Control Over Your Policy Costs – You can adjust the voluntary excess to find a balance between affordable premiums and manageable out-of-pocket costs.
- Encourages Responsible Driving – If you have a higher voluntary excess, you might be more cautious to avoid accidents and claims.
Potential Downsides of Voluntary Excess
While voluntary excess can save you money on premiums, there are some risks involved:
- Higher Costs When Making a Claim – You must be able to afford both compulsory and voluntary excess if you need to claim.
- Not Always Worth It – If your voluntary excess is too high, you might hesitate to claim minor damages because the cost of repairs might be close to or lower than your total excess amount.
How to Choose the Right Voluntary Excess
Deciding on the right voluntary excess depends on several factors, including:
- Your Financial Situation – Only set a voluntary excess that you can comfortably afford to pay in case of an accident.
- Potential Savings – Compare insurance quotes with different voluntary excess amounts to see how much you can actually save.
- Your Driving Record – If you rarely make claims and have a safe driving history, a higher voluntary excess might be a good option.
Frequently Asked Questions
1. Is voluntary excess refundable?
No, voluntary excess is not refundable. If you make a claim, you must pay the total excess before the insurer covers the remaining costs.
2. Can I change my voluntary excess later?
Most insurers allow you to adjust your voluntary excess at renewal, but not during an active policy period.
3. Should young drivers choose a higher voluntary excess?
Young drivers already have high compulsory excesses, so adding too much voluntary excess could make claims unaffordable. It’s best to find a balance.
Conclusion
Voluntary excess is a useful tool to manage your car insurance premiums, but it’s essential to choose a level that makes financial sense. While a higher voluntary excess can lower your premiums, it also means you’ll have to pay more out of pocket if you make a claim. Always assess your financial situation and compare quotes before making a decision. By striking the right balance, you can get the best value from your car insurance policy.
