Car insurance excess is well known to everyone. Most people know you can adjust it to reduce your auto insurance. However, the problem is that not everyone understands the concept of car insurance excess, whether it involves voluntary excess or compulsory excess. This article centres its point on fully understanding what voluntary excess is, when it is due, and how to pay it as it relates to car insurance.
Car Insurance Voluntary Excess
In order to properly comprehend voluntary excess and how to apply it, we must first understand vehicle insurance excess.
So, what is the car insurance excess?
When you buy car insurance, your policy documents will state your excess, which is the amount you will pay toward any claims.
Your car insurance excess usually consists of two components:
- Compulsory excess: This is set by your insurer and it is totally non-negotiable
- Voluntary excess: This adds to your compulsory excess if you have to file a claim.
For example, If your compulsory excess is £150 and your voluntary excess is £100, the insurer will keep £250 and reimburse you £500 on a £750 claim.
What is Voluntary Excess?
In voluntary excess, you set the amount of excess you’re willing to pay. Many consumers can reduce their automobile insurance premiums by increasing their voluntary excess.
When getting a car insurance quote, consider how adjusting your excess impacts the price and pick an amount that works for you.
If you file a claim, you may be required to pay both the voluntary and compulsory excess.
Many policies, like car insurance, allow you to choose an excess amount within a range.
On top of the compulsory excess, you can pay an optional sum towards a claim. For instance, If your policy contains a compulsory excess of £350 and you add a voluntary excess of £200, your claim will cost £550.
What Is Compulsory Excess?
It is a sum that your insurance company has set and which you will have to pay in the event of a claim. It is non-negotiable and dependent on your age, the type of claim, and the car you drive.
For claims, the compulsory excess is added to the voluntary excess. Your policy should indicate this amount.
If you’re a new or inexperienced driver, your compulsory excess may be higher than that of someone older or more experienced.
Because most insurers consider new and young drivers to be higher-risk drivers, they normally pay a larger excess. But your policy should state this.
Also, a luxurious or high-performance car may require an extra fee.
How Much Voluntary Excess Can I Pay?
The amount of excess you should add to your insurance depends on your budget.
While a greater voluntary excess can help lower your premium, you must ensure that you can afford the compulsory excess plus the voluntary excess if you need to make a claim.
When you get an estimate from your insurer, they’ll ask how much voluntary excess you want. The list of quotes will reveal the total excess (compulsory and voluntary) you must pay if you file a claim.
Then, after that, you can modify it to observe how it affects the pricing.
Another side of the coin is how perceived danger levels influence your excess. But this time, it’s not based on your insurer’s risk assessment of you. It boils down to your driving confidence and how likely you think it is that you will have an accident
Do I Pay Excess On Car Insurance If The Accident Wasn’t My Fault?
If another driver is at fault for an accident, your insurance company will probably make a claim under their policy, removing the need for you to pay an excess. If you have third-party car insurance, you will not pay an excess because your losses are not covered and your insurer will cover claims made against you.
However, If the cost of repairs is less than your policy’s excess, you will not be able to file a claim and will have to pay for the repairs yourself.
Unless you have legal expenses insurance, you will be responsible for paying any legal fees arising from an accident that was not your fault.
Should I Increase My Voluntary Excess?
The higher your voluntary excess, the cheaper your auto insurance. But it’s always worth seeing what a £0 excess would cost.
As stated previously, you must also consider your financial situation in the event of an accident or theft. You can choose it when you buy your policy, but you can’t change it when you need to make a claim.
So if you need to make a claim, it will require you to pay both this amount and your compulsory excess. If you can’t pay, your insurer won’t pay the balance of your claim.
That’s why u need to take this into consideration before effecting any changes.
How Else Can I Lower My Insurance?
If you don’t want to risk a bigger excess, here are some more options:
- Boost your car’s security. The more difficult your car is to steal, the safer it is.
- Keep track of your miles. Overestimating your driving can lead to overpaying.
- Always compare prices. Permitting your auto-renewal vehicle insurance to cost you
- Improve your plan. No longer driving to work? Informing your insurer could save you money.
When Do I Pay Excess On Car Insurance?
You pay your compulsory and voluntary car insurance excess when you make your car insurance claim. However, the overall excess may be more than the cost of repairing the automobile if you’re in a minor collision, mostly if you raise your voluntary excess willfully. This is when you must determine whether or not to file a claim. Ensure that you always notify your insurer of every accident, even if you don’t plan on making any claims.
More so, In reality, insurance is far more complex, involves several spreadsheets, and takes a longer process.
Does Increasing My Voluntary Excess Reduce Car Insurance Cost?
Choosing a bigger voluntary excess often reduces vehicle insurance costs. For example, increasing your excess from £0 to £250 might save you roughly 5% on your auto insurance.
A bigger excess means a lower premium for two reasons:
- Accepting a higher excess implies you won’t be making low-value claims.
- If you file a claim, the insurance company must pay less.
Conclusion
In conclusion, unlike compulsory excess, voluntary excess doesn’t apply compulsorily to your policy; it’s an amount you’re willing to pay. However, considering this option will mean paying less for your car insurance policy. But if you feel insecure about your policy and think you need to put it in place, then you should consider the points raised in this article.
FAQs
Should I pay voluntary excess?
It can sometimes lower your premiums if you opt for the right deal. But it’s only going to lead to savings if you don’t need to make a claim – otherwise, you’ll end up paying more
How does voluntary excess work?
The compulsory excess is set by your insurance provider and can’t be changed. The voluntary excess is how much you choose to pay on top of the compulsory excess.
Is it better to have a higher voluntary excess?
By choosing a higher voluntary excess, you will reduce your premium; but you will also have to pay more if you do make a claim. If you choose a lower excess, your premium may be higher, because your insurer will have to pay more in the event of a claim.
What should I put as my voluntary excess?
The disposable income you have access to in case a claim is necessary will largely determine the voluntary excess amount that you commit to. It should be set at an amount that you can comfortably manage to pay whilst taking the inclusiveness of compulsory excess into consideration
