If you make a claim on your car insurance, you will have to make a contribution to the full cost of the claim. This is known as an excess and is made up of a compulsory excess determined by the insurer and a voluntary excess that you can set.
In this post we’ll explain how voluntary excess works and explore the pros and cons to help you determine how much you should pay.
What is Compulsory Excess in a Car Insurance Policy?
Most car insurance policies will include a compulsory excess. This amount is determined by the insurer and will vary depending on the specific car you drive, along with your personal circumstances and what the claim is for.
What is Voluntary Excess in a Car Insurance Policy?
Voluntary excess is the amount of money you agree to pay on top of any compulsory excess set by the insurer if you make a claim on your car insurance. It’s ‘voluntary’ because you choose this amount when setting up your policy.
Can A Voluntary Excess Reduce Car Insurance?
Yes, paying a voluntary excess can lead to lower car insurance premiums. Offer to pay a voluntary excess, and you’re offering to make a greater contribution to the full cost of any claims you make on your policy. This means that the insurer would not have to pay out so much money in the event of a claim. As a result, they may charge you less on your premiums.
Potential Risks of Voluntary Excess
Why don’t all drivers offer to pay a voluntary excess, if it leads to lower premiums? Because, if you ever need to make a claim on your policy, you will have to pay however much you offered to pay as a voluntary excess, along with the policy’s compulsory excess.
For example, if you chose to pay a £500 voluntary excess, to bring down the cost of your premiums and your policy has a compulsory excess of £300, this brings your total excess to £800. This is the amount you’d have to contribute to the total claim cost.
This is where voluntary excess can get risky. In the short-term, it could help you save money on cover. But in the long-term, it could leave you facing significant costs that you may not be able to afford.
It’s also worth remembering that paying an excess does not always mean you’ll lose that money permanently. If an accident was not your fault and the insurer successfully recovers costs from the third party, you may be able to recover your excess too. Many drivers also choose optional legal expenses cover (sometimes called motor legal protection), which can include access to an uninsured loss recovery service that may help recover costs such as your excess from the at-fault driver.
How Much Voluntary Excess Should You Pay?
You don’t need to pay any voluntary excess. That’s why they call it “voluntary”! How much you pay is entirely up to you.
When deciding how much voluntary excess to pay, consider the following:
- How much disposable income do you have? Would you be able to contribute to any repairs or other costs in the event of a claim?
- Remember that you’ll have to pay the voluntary excess on top of the compulsory excess. Factor this into your calculations.
- What sort of car do you drive? You may face higher repair costs if you drive an older or a more expensive car. This will affect the cost of your claims, which may influence how much of a voluntary excess you can afford.
If you’re a young driver, then you might have limited savings, along with a comparatively low disposable income. In this case, it may choose to pay a lower voluntary excess, as it could mean you’d struggle to contribute to costs in the result of a claim. You might find it much easier to simply budget for higher premiums.
Get Affordable Comprehensive Insurance From Go Girl
At Go Girl, we offer competitive cover for young drivers with a range of useful extras, including optional RAC breakdown cover.
You’ll start building your no claims discount from the moment your policy starts. You’ll also have the chance to protect it after just one claim-free year. This means you can start benefiting from lower premiums as soon as possible, even if you choose not to pay a voluntary excess.
You can get a quote for young driver car insurance and buy online in minutes.
