What is voluntary excess on car insurance?

When you take out a car insurance policy, there are a few things you'll need to bear in mind. The level of coverage you receive is of course important, as are the premiums you'll have to pay on a regular basis.

But there's something else too – the excess. Read on to discover more about car insurance excess, and about voluntary excess in particular, in our handy guide.

Car insurance excess

Before we get into voluntary excess on car insurance, let's first take a look at what car insurance excess actually is. Car insurance excess is the contribution you will need to make to the amount you're claiming for – the insurance provider should cover the rest.

Remember to consider this before you take out insurance. You'll need to factor in the cost of the premiums you will need to pay, plus the cost of the excess if you do need to make a claim. Typically, all of these costs would still work out cheaper than repairing the potential damage to your vehicle, but you still need to bear these costs in mind.

Understanding voluntary excess on car insurance

So, if car insurance excess is something you have to pay anyway, what is voluntary excess? Well, the voluntary aspect is not really about if you have to pay. Rather, it is about how much you have to pay.

When you take out insurance, you may have the option to pay more than the minimum excess. Essentially, you are able to set a voluntary amount of excess, within the insurance provider's own levels. You can also find voluntary excess clauses on home insurance policies, which work in the same way.

The benefit of voluntary excess on your car insurance

But why would you do this? Why would you pay more excess than you have to? There are a couple of reasons for this.

Potentially reducing your regular premiums

The main reason for increasing your voluntary excess is that it can actually end up saving you money. Claiming on insurance is usually a last resort – something to protect you financially in the event that you do have an accident or if you need to repair or replace your vehicle.

Hopefully you'll never have to make a claim which means you'll never have to pay the excess. You'll want to think about, should something happen what could you afford to pay towards your claim – the insurance policy's coverage is just a safety net – which means you're hoping to avoid having to pay any excess at all. What you can't avoid, however, are the car insurance premiums. So, if you can reduce those premiums by increasing the level of excess you're willing to pay, you could end up saving yourself a considerable amount of money.

Possibly giving you access to better coverage

Another reason for increasing your voluntary excess is that it could possibly help you to find better coverage, for less. Increasing the amount of coverage you receive will generally involve increasing the regular premiums you have to pay. However, raising the voluntary excess may help you to achieve more coverage for you and your car, without pushing those monthly premiums too high.

This is because increasing the excess like this is effectively protecting the insurance provider. You are showing the insurance provider that you are not planning to make any claims, and, if you do, you are willing to pay more in excess – this is why the insurance provider may offer reduced premiums for the same coverage in exchange.

It all comes down to the calculation. Are you willing to increase your excess in exchange for reduced premiums? These sums may help you reduce the overall cost while maximising the coverage you receive. You will be taking on a bit of extra risk, but you might consider this worthwhile depending on your own situation.

What is compulsory excess on your car insurance?

You can view compulsory excess as the minimum amount of excess you'll need to pay in the event of a successful claim. All customers will have to pay this level of excess, and you are not likely to receive any perks from your insurance provider as a result.

Generally speaking, if you want to reduce the regular premiums, you'll need to pay some additional voluntary excess.

Remember to factor this into your calculation, and to check the terms and conditions of your policy to find out how much you'll have to pay in total. For example, you may have to pay voluntary excess on top of the compulsory excess. So, if the compulsory excess is £100 and you decide to pay voluntary excess of £150, you may end up paying £250 in total – check with your insurance provider before you buy your policy.

Is it possible to pay zero excess?

It can be possible to pay zero excess on your car insurance in some cases. It's up to the insurance provider you choose – they may be able to offer policies that have no excess. Your premium may cost more in this situation, but the provider should handle the full cost of the claim themselves in this case.

Of course, this will typically provide the lowest level of protection for the insurance provider themselves. As a result, you can expect that this will be reflected in the cost of your premiums. Yes, you may be saving money on the excess, but you're likely to be paying quite a bit more on your regular premiums! Remember to bear all this in mind when you make your decision on an insurance policy.

A few final tips...

• After you purchase an insurance policy review your policy documents to make sure you're clear on what the excess is and what's covered
• If you're curious and would like to find out more, have a read about Car Insurance on our blog

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.