Car insurance: Compulsory and voluntary excess explained

Posted by mustard.co.uk on June 29th, 2017

What is your car insurance excess and what’s the difference between compulsory and voluntary excess? Read our guide to find out.

If you’ve ever purchased car insurance before, or have compared several quotes online, you’ll have doubtless noticed something called an excess payment – split into a compulsory excess and a voluntary excess.

It’s easy to dismiss this as just another way insurers try to cheat money out of motorists, but it’s an important part of the process and one you can’t avoid. Even the most experienced and lowest-risk drivers will have some amount of excess on their insurance policy.

But what’s it used for and when do you have to pay it? Read on to find out.

What is an insurance excess?

If you’re making an insurance claim against a third party, then your insurer recovers all their costs without charging you. If you’re at fault however, the excess is a sum of money that you’ll need to pay when you make a claim on your insurance.

It’s split into two parts, voluntary and compulsory, and both need to be paid when you’re making a claim on your policy. They’re included to discourage you from making costly insurance claims for items that aren’t worth it – after all, you probably won’t claim for £100 worth of paint damage if it costs you £500 to make the claim in the first place.

What is compulsory excess?

As the name suggests, compulsory excess is a fixed amount of money you have to pay when making an insurance claim.

Your insurer decides how much this excess should be, using your driving history and profile to calculate how much to charge – in much the same way as they do to calculate the cost of your premium. This, generally speaking, means expensive policies will usually also come along with an expensive compulsory excess – which might seem unfair.

You have no say in the amount of money your compulsory excess is, so if you’re not happy with the amount quoted you’ll need to switch insurer.

What is voluntary excess?

Voluntary excess is an additional sum that needs to be paid on top of your compulsory excess when making a claim. The name ‘voluntary’ doesn’t mean you can decide whether or not to pay it – what it means is that when you’re taking out the policy, you can choose how much you want to pay.

The more you’re willing to pay for your voluntary excess, the cheaper your premium will usually be – and vice versa. You’re not obliged to pay anything, but you’ll find that does increase the cost of your premiums by quite a margin.

On the flip side, it can be tempting to push your voluntary excess as high as it will go in a bid to reduce your premiums, but take care, because you don’t want to find yourself in a position where you’re unable to pay your excess if you need to make a claim.

How does voluntary excess work?

It’s very simple – all you need to do is choose the amount of excess you’re willing to pay at the start of your policy. Most comparison websites or online forms will have this as a slider where you can vary it to as much or as little as you want.

Most insurers will have an upper limit on voluntary excess, which could be as low as £300 or as high as £1,000. Many drivers opt to make their voluntary excess the same amount as their compulsory excess. It’s important that you play around with pricing to make sure you’re not just happy with your voluntary excess, but with your insurance premiums, too.

A higher voluntary excess reduces your insurance premiums because you are, in essence, promising the insurer that you’ll cover some of the costs of your claim – whether it be for vehicle repairs or personal injury claims.

Voluntary excess car insurance

Worried about paying your voluntary excess in the event of an accident? Some companies offer voluntary excess insurance, where a monthly premium will pay out the sum of your voluntary excess in the event of an accident.

Excess insurance is not cheap, though, and you’ll need to very carefully price it up before committing.

What is a windscreen excess?

Car windscreens are a real puzzle – damage to them is very rarely the driver’s fault, so paying out hundreds of pounds on your insurance excess would seem unfair.

This is why most insurance companies offer a separate excess for windscreen repair or replacement. It’s usually much less than the price of a regular voluntary excess, and is often included in fully comprehensive policies as standard. Adding it as an optional extra will usually cost around £30.

Windscreen cover often extends to other glass on the car, which is useful.

Whether you need to actually pay your windscreen excess depends on the kind of damage. If the screen is damaged beyond repair, the excess will usually be less than £150. For a simple repair job, the excess is likely to be less than £50, or even free.

If you can’t pay your insurance excess

If you need to make a claim but cannot pay your insurance excess, your insurer is unlikely to accept your claim and will refuse to pay out.

This is why it’s so important to set your voluntary excess at a level that’s affordable to you.

Your insurer may be able to offer you a payment plan for your excess, but you should not rely on this happening.