Voluntary excess – how much should I pay?

Voluntary excess

What is a voluntary excess?

A voluntary excess is the amount that you would have to pay if a claim is made on your motor insurance policy, before your insurer would make any payment and is in addition to the compulsory excess. Whether the damage is your fault or not, the voluntary excess stays the same. 

Is the voluntary excess the same for every driver on a policy?

The voluntary excess is not always the same for all named drivers on a policy. When you add additional drivers to your policy the voluntary excess for them may be a different amount. Details of this will be confirmed in your policy quote and schedule. 

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What is a compulsory excess?

All insurance policies will have a compulsory excess, which is set by the insurer. For example, an insurer might require you to pay the first £100 of any claim. This type of excess is, as the name suggests, something you have to agree to when you take out an insurance policy.

Compulsory excess can be set by insurers to reflect the risk level of any particular driver, taking into account factors such as age, claim history, engine size and where vehicles are stored overnight. 

Am I obliged to have a voluntary excess?

A voluntary excess is strictly optional; it is up to you to decide if you want to add one to your policy. The voluntary excess is paid in addition to the compulsory excess, so for example with a £300 compulsory excess and £300 voluntary excess you would pay the first £600 of any claim, adding together both excesses.

Why would I choose to have a voluntary excess?

The reason many people choose to have a voluntary excess is that it can significantly reduce the cost of insurance premiums. Although you take the risk of being out of pocket in the event of a claim, this has to be balanced against the savings on your premiums.

Many mature drivers recognise that years of experience on the road give them a relatively low probability of making a claim, so they make a calculated choice to pay a voluntary excess and benefit from lower premium payments. 

Voluntary excess

How should I choose the level of my voluntary excess?

Your voluntary excess should be set at an amount that you could comfortably manage to pay in the event of a claim (inclusive of the compulsory excess). Many younger drivers are put off taking on a voluntary excess if they have little disposable income or savings.

Older drivers often have the financial stability to take advantage of the lower premiums associated with a voluntary excess. To ensure they can cover the cost of an accident, some people even deposit the combined sum of the compulsory and voluntary excess in a savings account earmarked for this purpose, earning interest in the meantime.

Alternatively, you may wish to explore our Lifestyle Excess Protection, an insurance policy, which pays you back for any excess (both voluntary and compulsory) you have to pay in the event of a claim. For a small premium, you could benefit from reduced premiums on your main policy and have peace of mind in the event of a claim your excesses will be paid back. 

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Published: 9th November 2015 (RB)