Compulsory vs voluntary excess

You might know that when you make a car insurance claim, you have to make a contribution towards the cost, known as an excess. What you might not know is that this excess is made up of two different contributions: a compulsory one, which you have no influence over, and a voluntary one, which you do. Read on to discover the differences and why they matter.

What is a car insurance excess?

A car insurance excess is the amount that you have to contribute if you need to make a claim on your policy. So if, for example, you skid on ice and crash into a wall, the cost of repairs to your car (and potentially the wall) might run to thousands of pounds. But you will only need to pay the excess amount. This usually won’t exceed two or three hundred pounds, and may be less. Your insurer will cover the rest of the costs.

There are two main types of excess: compulsory excesses and voluntary excesses.

What is a compulsory car insurance excess?

A compulsory excess is set in stone by your car insurer. You have no influence over the level of compulsory excess on your policy, and must pay it if you make a claim on your car insurance.

What is a voluntary car insurance excess?

A voluntary excess is an amount that you can choose to pay on top of the compulsory excess. But why would anyone choose to pay more towards a claim, I hear you ask? Well, in short, it can reduce your car insurance premium. We explain why, and by how much, later in this guide.

Do I have to have both a compulsory and voluntary excess on my policy?

You have no choice about having a compulsory excess on your policy. Them’s the breaks, sadly. You can, however, choose to reduce the level of your voluntary excess to £0. Just be aware that this is likely to drive up the cost of your up-front premium.

Do I always have to pay an excess in the event of a claim?

If you were involved in an accident where another driver admits they were fully at fault, then you typically won’t be liable to pay the excess amount. This is because your insurer should be able to recover the full cost of putting any damage right from other driver’s insurer. However, you may need to pay the excess initially to get repairs on your car kicked off. Your insurer should pay you back when it has been able to recover its costs.

For most other claims, including theft, accidents, and other types of damage, you will need to pay an excess. There are a few exceptions to this rule. They include:

• An accident caused by an uninsured driver, if your policy includes an “uninsured driver promise”. Many comprehensive policies include this guarantee. It means you don’t need to pay an excess and your no-claims bonus will be protected if you’re involved in a prang with an uninsured driver.
• Your claim is to repair damage to your windscreen. Some car insurers don’t apply excesses to repair chipped or cracked windscreens. This may depend on the level of damage. In some cases, you may need to pay a small extra premium for full “excess-free” windscreen cover.
• You have excess protection insurance. This may be an optional extra on your car insurance policy, or a separate policy. It means you can claim back the cost of your excess in the event of a claim.

When do I have to pay my car insurance excess?

The precise timing depends on your insurer. Some will ask you to pay as soon as you make a claim. Others might send you a bill when the claim is paid out.

Bear in mind that while you do have to tell your insurer about all incidents (or risk invalidating your policy if you don’t), you don’t necessarily have to claim on your insurance for all repairs.

Let’s say your combined compulsory and voluntary excess is £500, and the cost of repairs is less than this (or even about the same level). You may decide it’s more economical to pay for repairs yourself, especially given that making a claim could affect any no-claims discount you’ve built up and drive up next year’s premiums.

How much is a typical compulsory excess?

Unfortunately there’s no clear-cut answer to this, as compulsory excesses vary by insurer and even by specific policy. They can also vary depending on your personal circumstances. For example, young drivers, those with driving convictions, and drivers of high-performance cars might all be subject to higher compulsory excesses.

When we carried out a search for car insurance on a price comparison site, for a 31-year old, London-based teacher driving a VW Golf, we found that the majority of compulsory excesses hovered around the £150 to £250 price range. However, there were also a couple of policies with no compulsory excess, as well as a handful that topped £500.

The highest compulsory excesses didn’t always correlate with the lowest premiums (and vice versa). So, it’s well worth double checking the level of compulsory excess on any policy that catches your eye before hitting the buy button.

How much is a typical voluntary excess?

Because you can adjust the level of voluntary excess, there isn’t really a “typical” level. However, many comparison sites seem to set the default level of voluntary excess to around the £250 mark, suggesting this is a popular voluntary excess to choose.

Are excesses the same for all types of claim?

The standard compulsory and voluntary excess will apply for most types of claim, such as theft of your car, or an accident. However, there are some sections of your policy where a smaller excess might apply. The most common is for windscreen repairs.

Windscreen chips and cracks are among the most common car insurance claims, but the amount they cost to repair is usually capped at a relatively low level. Because of this, many insurers apply a lower excess. Some policies even waive excesses completely for minor windscreen repairs, though you may have to pay extra for this feature.

At the other extreme, you may find yourself having to pay an extra excess if you choose to have your repair done at a garage that isn’t on your insurer’s “approved repairer” list.

Can I change my compulsory excess level?

Afraid not. The compulsory excess is set by your insurer and is non-negotiable. The only way you can “change” your compulsory excess is to choose a different insurer.

Can I change my voluntary excess level?

Yes. When you take out a car insurance policy, the voluntary excess level will be set at a certain amount by default. Don’t assume it’ll be automatically set to zero. Whether you buy directly from an insurer or via a price comparison site, there will be an option to change this using a drop-down list or a slider tool.

You can adjust the level of voluntary from £0 to as much as £1,000 (or, potentially, more). Usually you’ll have to adjust in increments of £50, £100 or £250, depending on the site.

How can changing my voluntary excess level affect my premiums?

We used a price comparison site to run a quote for a 31-year-old teacher, living in London and driving a VW Golf.

The table below shows how the cheapest premiums on offer changed depending on the voluntary excess level we set.

*Top 5 policies vary depending on the voluntary excess selected, so premiums should be taken as indicative rather than direct comparisons.

Why do higher voluntary excesses mean lower insurance premiums?

In the same way as the excess/premium balancing act is a trade-off for you, it’s also a trade-off for insurers. Insurers are all about weighing up risk and setting their prices accordingly. If they know they’ll get a bigger contribution from you in the event of a claim, due to a higher voluntary excess, they’ll be more willing to charge you less up-front. They’re also aware that higher excesses may put you off making a claim for smaller incidents at all.

How can find out what my car insurance excesses are?

Your car insurance excesses should be clearly spelled out on your policy documents. This should include your compulsory excess, your voluntary excess, and any specific excesses (such as for windscreen cover). If you’ve misplaced your policy documents, call your insurer to ask. It’s worth it so that you know what to expect if you make a claim.

Bottom line

It’s well worth getting to grips with the intricacies of excesses. It’ll mean you can make informed decisions over which policy to choose based on the compulsory excess, and what level to set your voluntary excess at. Just make sure not to opt for an excess that you couldn’t afford to pay on the basis that you’ll probably never make a claim, just to save a few quid on your up-front premium. If you do need to claim, it could come back to bite you.

Frequently asked questions

• Is excess insurance worth it?

  Excess insurance is a separate type of cover from your car insurance. It can be bought from a third party as a standalone policy, or some car insurers offer it as an add-on. The cover it offers means that, if you make a claim and need to pay an excess, you can claim the excess amount back from your excess insurance provider. Whether it’s worth it is up to you, and depends on the cost of the cover and whether you’d be able to afford to pay the excess if you claimed. You’ll need to do the maths to work out if you’re better off reducing your excess, and paying a higher car insurance premium, or opting for a higher excess and lower premium, but paying extra for excess insurance.

• Does a voluntary excess make your car insurance policy cheaper?

  Yes. Typically, the higher your voluntary excess, the lower your car insurance premium will be. But how much difference it makes in pounds and pence will depend on your personal circumstances.

• How are compulsory and voluntary excesses different?

  A compulsory excess is set by your insurer and is non-negotiable. A voluntary excess is an optional and adjustable amount that you can choose to add on to the compulsory excess in order to reduce your car insurance premium.