What is Voluntary Excess?

Go higher, pay less.

Paying voluntary excess can lower the cost of your regular car insurance payments. The downside is you’ll pay more if you need to make a claim. Read on to find out which option is right for you. 

If you need to make a car insurance claim after an accident, you’ll have to pay compulsory excess. On top of this amount, you can choose to also pay voluntary excess.

So what does voluntary excess mean? And is it worth paying? We’ll take you through the details. 

What is voluntary excess on car insurance?

As the name suggests, voluntary excess refers to the amount of money you voluntarily pay towards an insurance claim after a car accident. While choosing to pay more than you need to may seem like an unfavourable option, there are certainly perks to doing so. 

To understand why, let’s get to the bottom of how insurance excess works

Car insurance protects you from having to fork out huge amounts of money if you’re involved in an accident or your car is damaged or stolen. It’s specifically designed to help with larger amounts that may be difficult to pay in a lump sum. 

Charging excess helps protect insurers against drivers who make multiple claims for small incidents. It also safeguards insurance companies against fraudulent claims. Basically, if there is a cost to claiming, people are likely only to do it when necessary. 

This means you’ll have to pay excess on all the claims you make. The good news is you don’t have to pay excess on claims the other driver makes. 

The amount that you pay in excess is decided by the insurer and will be clearly outlined in your insurance policy. (Pro tip: read everything very carefully to ensure that you understand the terms of your policy before you sign.)

A number of factors are at play when it comes to how your excess is determined. If you’re an inexperienced driver or if you’ve been involved in multiple accidents, your compulsory excess may be higher. Essentially, the insurance company is looking to see how risky it is to cover you, and they construct their rates based on that assessment.

What is compulsory and voluntary excess?

Compulsory excess is charged to everyone who makes a claim, whether an accident was their fault or not. It is a set sum that is non-negotiable. Consider it the driver’s share of the cost towards repairs.

Voluntary excess, on the other hand, is something you set when you take out or renew your policy. You get to decide how much you’d like to pay on top of your compulsory excess (up to a maximum amount) — and whether you’d like to pay this additional amount at all. Voluntary excess is usually between £250 and £1,000.

In short:

Total excess you pay = compulsory excess + voluntary excess

(And you can choose if you’d like to set your voluntary excess at £0.)

So what does that look like in practice?

Say you’re in an accident and your car has £1,500 worth of damage. If your compulsory excess is £300, £300 is what you’ll have to pay towards the repairs. The insurer will pay the additional £1,200. 

If you have voluntary excess on top of this, you’ll have to factor that amount into your payment.

If you decide to add £200 of voluntary excess to the pot, you will have to pay £500 in total. The insurer would then have to pay £1,000.

Of course, that makes the burden a bit heavier at the time of the claim — but there are reasons why this might be a good idea. 

Let’s take a look. 

Why would you pay voluntary excess?

While voluntary excess means paying more at the time of the claim, there are longer-term benefits that are worth considering.

Paying more at the time of the accident reduces the amount the insurer has to pay. In the eyes of the insurer, you’re seen as less of a risk. If you’re less of a risk, your premiums (the amount you pay every month to the insurance company), are likely to go down. That means that, by choosing to make this higher once-off payment in the event of a claim, you could be saving money in the long run. 

While there are a number of factors that go into how insurance premiums work, you’ll usually save in the region of 5 and 7% if you up your voluntary excess by £250. 

The important thing to note is that you have to set your voluntary excess when you buy or renew your policy. Once it’s set, it’s set. You won’t be able to change it when you make a claim. If you’re unable to pay the excess that you agreed upon when you signed your policy, the insurer won’t pay the rest of the claim amount. 

So before you go ahead, consider whether you’ll have the money available to take on this additional financial burden if anything were to happen. 

If you don’t want to pay voluntary insurance, you can simply set this amount to £0 when you take out your insurance policy and pay more for your car insurance premiums.

When do you pay voluntary excess?

When you pay your excess is decided by your insurer. Some companies require you to pay your excess upfront as soon as you make a claim. Others are happy for you to pay it at the end of the claims process once the repairs have been done. 

If you’re not sure when your insurance company would require you to pay, it’s a good idea to check in with them so that you have all the information you need to make the best financial decision for your situation.

Do I have to pay voluntary excess if not my fault?

You will have to pay excess when you make an insurance claim, regardless of whether an accident was your fault or not. This applies to both compulsory and voluntary insurance. 

If the accident wasn’t your fault, however, your insurance company should claim the excess you paid back from the other party’s insurer. You will then be reimbursed once the other company pays out.

Is voluntary excess worth it?

There’s no right answer here. It really depends on your needs and your financial situation.

Voluntary excess will help lower the cost you pay for auto insurance annually. While that may make sound financial sense for some people, it’s important to make the choice that it’s right for you. If you don’t have the capacity to pay for voluntary excess should an accident occur, it may not be appropriate.

Read your insurance policy very carefully. Make sure you understand the details of what you need to pay on a monthly basis as well as what you would have to pay if you claim.

Here’s a checklist of things to consider when deciding whether voluntary excess is a good bet for you:

  • Will you be able to pay the voluntary excess at the time of a claim should you need to? Remember that it’s an amount on top of your compulsory excess. 
  • How much will you be able to save on your insurance payments if you increase your voluntary excess? Try to find the sweet spot for yourself — perhaps an amount that lowers your premiums while still leaving a manageable total excess figure that won’t be too much of a burden if you have to pay it.
  • Is there anything else you can do to lower your insurance premiums? Things like paying annually rather than monthly and asking your insurer to shop around for the cheapest plan when your policy is up for renewal can help save you money.

Quickfire summary

Unlike compulsory excess (which you have to pay every time you make a claim), voluntary excess is a payment you choose to make.

When you buy or renew an insurance policy, you can set the amount of your voluntary excess, usually up to about £1,000. 

Voluntary excess can help save you money on your insurance payments. It also means that you’ll have to pay more if you claim after an accident. 

However, the higher your voluntary excess is, the larger the lump sum you’ll have to pay if you claim. Take your personal financial situation into account to see if meeting this extra cost will be doable for you in the event of an accident. 

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