What Is Voluntary Excess?

14.09.2023 Grady A. Lowry 0 Comments

Contents

1 Is voluntary excess worth it?
2 Why would you pay voluntary excess?
3 Why pay excess on insurance?
- 3.1 Why is excess insurance important?
4 What is excess when does it need to be paid?

Is voluntary excess worth it?

Should I increase my voluntary excess? – Opting for a very high voluntary excess can reduce premiums but it could prove to be a false economy. This applies if, for instance, the costs involved with repairing your car end up being low – in this case, you may end up paying the full amount of a claim if you opt for a very high voluntary excess.

This can even result in you getting absolutely no advantage from your insurance policy at all because the savings you made on your insurance premiums are wiped out by the claims. You may even decide that it’s not worth claiming on your insurance at all (though you must alert your insurer to any accidents you do have, even if you don’t make a claim).

For example, let’s say your excess is £200 and you make a claim for £700. You will pay £200 and your insurer will cover the rest – £500. If, as described above, your excess is higher, say £600, your insurer would only have to pay the balance of £100. In this case, it may be better for you to pay that too so as not to lose your no claims bonus.

Why would you pay voluntary excess?

What does voluntary excess mean? – Voluntary excess is an amount you’re willing to pay towards the cost of a claim. The main reason you might agree to do this is that it could reduce the cost of your car insurance. When you get a car insurance quote, it’s worth looking at how changing the voluntary excess affects your price.

What should I set my voluntary excess at?

What are voluntary and compulsory excess on your car insurance? Car insurance may not be the most exciting subject in the world but we can all get excited about saving money and a good way to save is to have a good understanding of how car insurance works. One of the terms you’ll encounter while arranging your car insurance policy is ‘excess’.

You’ll be told of the compulsory excess on an insurance policy and given the option of setting your voluntary excess yourself.
In this article we’ll cover the meaning of these terms and everything you need to know to get the right policy with the right excess clauses for your needs.
In the world of car insurance jargon, excess is the amount you pay towards the cost of repairing your car in addition to the car insurance company payout.

The excess means that there’s a personal cost to you of making a car insurance claim beyond what you pay annually or monthly for your insurance cover itself. As well as the threat of losing your, the existence of the excess clause on an insurance policy acts as a deterrent to making claims so there’s no surprise that it’s popular with car insurers.

The compulsory excess on a policy is an amount set by the car insurer and baked into the insurance policy.
It is the amount you will have to pay towards the cost of any car insurance claim you make against the policy.
If your insurance policy has a compulsory excess of £200 that means that you will pay the first £200 towards any repair bill and the insurance will take care of the rest.

The compulsory excess cannot be changed once you’ve taken out the policy but different policies will have different levels of compulsory excess. If you’re a higher risk driver the compulsory excess you’re offered will probably be higher than for lower risk drivers.

In addition to the compulsory excess, your insurer will also give you the option of setting the voluntary excess on a policy.
The voluntary excess is a further amount that you agree to pay towards the cost of any repair that you make a claim for.
Crucially, the level you set the voluntary excess at will impact on the cost of your insurance policy.

If you set a high excess, you reduce the risk to the insurer and your premiums will be lower but you are increasing the risk to yourself and it’s vital to set the voluntary excess that means you can still afford to get your car repaired. If you have a compulsory excess of £200 on your policy and you set the voluntary excess at £200, you will have to pay the first £400 of any claim you make on your car insurance.

If the claim was for £1,000, the insurer would pay the remaining £600.
The excess clause in the insurance policy has the effect of making smaller claims uneconomical.
It stops motorists making claims with a value lower than the excess on their policy but even claims slightly higher than the excess charge aren’t worth it.

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For example, if you are on a policy with a £400 total excess charge, it is unlikely to be worth the hassle of making a claim for a £500 repair considering that the insurer would only pay £100 of that bill and you will lose your no claims bonus if it isn’t protected.
Even if you decide not to make a claim after an accident, you must still inform your insurer of any damage to your car or you risk voiding your policy.
Setting your voluntary excess is a balancing act between saving money on the cost of your annual insurance policy and making sure that any car repairs you might have to claim for are affordable.

It’s usually possible to save between 5 and 7 per cent on your annual car insurance premium by agreeing to a £250 voluntary excess. You could set that voluntary excess at £0 or go much higher for bigger savings. Most insurers give the option of setting the voluntary excess between £200 and £1,000.

The thing to remember is that the higher you go, the more any insurance claim is going to cost you. If you set your voluntary excess too high and end up with a large car repair bill you might find that you cannot afford to get your car repaired at all. You need to have an idea, when setting the voluntary excess, of how much you could afford to pay if such a large repair bill came about.

And how much you’d be willing to pay to get those lower insurance premiums. If you can’t pay the excess on a claim, the insurer may not pay out. We sourced some example insurance quotes from a well-known UK insurer for a 42-year-old man living in Banbury, Oxfordshire.

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Quote number	1	2	3	4	5
Compulsory excess	£350	£350	£350	£350	£350
Voluntary excess	£0	£100	£250	£500	£1,000
Total excess	£350	£450	£600	£850	£1,350
Annual insurance premium	£855.68	£792.66	£766.63	£729.66	£726.25

Exactly when the insurer actually asks you to pay the excess charge will vary so check the small print on your policy. It might be that you’ll have to pay the excess upfront when you submit the insurance claim or you might pay at the end of the claims process when the insurer pays its share of the repair bill.

If the accident that caused the damage wasn’t your fault and your insurer is claiming against the other party’s insurance policy you still have to pay the excess. Your insurer may recover the charge and refund it to you but this can take time. If the other party in an accident doesn’t have insurance or cannot be traced you could end up having to pay the excess regardless of whose fault the accident was.

Frequently Asked Questions Compulsory excess is the amount you pay towards the cost of any insurance claim, it’s a fixed part of your insurance policy. Voluntary excess is an additional charge, usually between £200 and £1,000, that you select when taking out the policy that is paid on top of the compulsory excess.

The compulsory excess charged on your insurance policy is calculated by the insurer based on your risk profile so it can’t be changed.
Your age, location, driving experience, claims history, job and type of car will all play a part, along with other factors.
To lower your compulsory excess, look at ways of reducing your risk profile like adding a named driver or parking your car off the road at night.

Setting a higher voluntary excess reduces the risk to the insurer because you are agreeing to pay a higher proportion of any claim that you make. You are also less likely to make a claim if the value is less, or only a little more, than the excess charge.

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: What are voluntary and compulsory excess on your car insurance?

Is it better to have higher or lower voluntary excess?

While choosing a higher voluntary excess will help to reduce your premium, you need to be sure that if you have to make a claim, you can afford to pay the compulsory excess, plus the voluntary excess on your policy.

Do I pay my excess if I’m not at fault?

Do I pay excess if accident is not my fault? – typically yes. Your insurer should recover the money from the insurer of the at-fault driver – eventually, then they will pay it back to you.

Why pay excess on insurance?

Can raising your excess save you money? – Increasing the voluntary excess on your insurance can be financially worthwhile in some cases. But you need to weigh up the pros and cons, to help you decide if it’s the right option for you. Adding a voluntary excess can lower the cost of your insurance premium – the amount of money you pay for an insurance policy.

This is because the insurer won’t have to pay out as much in the event of a claim. Paying a lower premium means that you can save money on your insurance cover. However, you should consider your total insurance excess and make sure it’s at a level you feel comfortable paying, in case you ever need to make a claim.

Don’t raise your voluntary excess beyond what you could afford to pay towards a claim.

Why is excess insurance important?

Sometimes things go wrong – a car accident, a guest slips and falls on your property, or a lawsuit. If you don’t have the right coverage, an unfortunate situation can compromise your financial security. Find out what Excess Liability (Umbrella) coverage is, and why it’s important.

What is Excess Liability coverage? Excess Liability, sometimes known as an Umbrella policy, will respond when the underlying liability limits of your other policies, like homeowners or auto, have been exhausted. For example, if you were to be injured in a car accident and needed expensive surgery, you would be on the hook to pay for any costs beyond what the at-fault driver’s own Liability limits would cover.

This is where Excess Liability coverage would kick in to help cover those unexpected costs. Do you need Excess Liability coverage? Check all that apply:

I own a home I regularly drive a car I have children who drive or are away at school My home has a swimming pool I employ a housekeeper, nanny, gardener and/or other domestic staff I have a dog I own a boat I entertain at my home I blog, tweet, and/or post comments or photos online I serve on a board of a non-profit and/or a for profit organization

If you checked just one of the above risk factors, you need Excess Liability coverage. If you selected many, then your exposure to liability risks may be higher than average. Ask your insurance broker to closely at your limits of coverage and determine if they are adequate.

Enclose your swimming pool or yard with a fence that includes self-locking and self-closing gates. Never leave a child unattended around the pool. Keep your eyes on swimmers at all times, or designate an adult supervisor. Be aware of your local weather conditions and never go swimming during thunderstorms. Be sure all walkways and stairs at your home are clear of obstacles, ice, and debris. Maintain adequate lighting, especially in high traffic areas and on stairs. Never serve alcohol to minors. Guests intending to drive immediately after the occasion or those who have had too much to drink should not be served alcohol.

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What is excess when does it need to be paid?

FAQs Q: What is an excess and when do I need to pay it?

A: An excess payment is the amount you have to pay towards a claim. Insurance policies have different types of excesses that can apply in different situations. The amount and types of excess you would be required to pay is listed in your insurance documents.

Is it worth getting breakdown cover?

You regularly travel long distances – If you often drive long distances, having breakdown cover can reassure you that you won’t get stranded far from home. The more comprehensive National Recovery or Onward Travel options provide cover to get you and your car home or to your intended destination. Arranging a tow and transport back home is likely to be very costly if you don’t have breakdown cover.

Can I claim back my excess?

Paying excess for a car accident that isn’t your fault – When you pay the excess for a car accident which isn’t your fault, you may need to claim this back from the insurance company of the driver who caused the accident once the claim is settled, if you don’t have legal expenses cover to pay this for you.

What if damage is less than excess?

Repairs smaller than your excess? – If the damage to your vehicle is minor, and the cost of repairing it is less than your excess, lodging a claim is unnecessary. You can still have a claims adjustor make an assessment of the damage so you have an accurate idea of the bill you’re facing, but without any obligation to file a claim.

Do you always pay excess?

When do you pay excess on car insurance? – You pay the excess in the event of any claim made on your insurance policy regardless of who’s to blame. However, if it’s proved the accident was the other person’s fault and the full cost is recovered from their insurer, you may be able to recover this amount. : How does car insurance excess work? – Admiral.com

What does in excess of $500 mean?

Understanding How Car Insurance Excess Affects You – Words: 1560 Time: 9 minutes Read this guide to help you choose the right car insurance excess amount that works for you. Car insurance excess (also known as deductible) is a term you might always see on car insurance policies, and you might have some idea of what it is, but always wanted to find out more about it.

What exactly is car insurance excess? How does it work? How much excess in car insurance do you have to pay? How does excess affect your car insurance premiums? When do you have to pay car insurance excess?

Whether you’re a new driver shopping for car insurance or an experienced car owner looking to understand your existing coverage better, this guide will answer all these questions and equip you with the knowledge you need to make better informed decisions when it comes to your car insurance coverage.

What does the Term “Excess” in Insurance Mean? In simple terms, “excess” in insurance refers to a certain amount of money that policyholders need to pay out of their own pocket before their insurance coverage kicks in.
The point of this is so that policyholders take on some of the financial risk as well as the responsibility to take care of small damages, while the insurance company aims to take care of claims of a much more significant value.

What Is Excess in Car Insurance? Car insurance excess, also known as a car insurance deductible, is what you first have to pay towards a claim, before your insurance coverage even takes effect. When you make a claim for damages to your vehicle, such as from a car accident or theft, the insurance company will assess the total cost of car repairs or the value of the loss.

The excess amount is what the insurance company will NOT be covering.
So they will subtract (or deduct, hence the alternate term “deductible”) that predetermined excess amount from the total, and cover only the balance.
How Does Car Insurance Excess Work? Let’s use an example situation to best understand how car insurance excess works: Imagine that you have a car insurance policy with an excess or deductible of $500.

If you get into an accident and the car repair costs amount to $3,000 in total, you would be responsible for paying the initial $500 (excess), and the insurance company would then cover the remaining $2,500. Because of this, if the total repair costs come up to $250, for example, you probably wouldn’t find it necessary to file for such small claims, since it is less than $500. Car repairs can really add up, so knowing that your insurance company will cover all the rest of the expense above the car insurance excess amount can be both comforting and financially helpful. Types of Car Insurance Excess: Compulsory VS Voluntary Excess There are two major types of car insurance excess: Compulsory Excess, and Voluntary Excess Compulsory excess : This is a fixed excess amount that the insurance company sets for your policy, and it is based on several factors, such as your car model, and your age, and driving experience. Drivers under the age of 30 are usually required to pay a higher compulsory excess amount. Voluntary excess : This is an amount of money that you choose to add on top of the compulsory excess if and when you make a claim. As the name suggests, you get to decide how much you want to pay as your voluntary excess.

For example, in the above example of a total bill of $3,000 in repairs costs, if your compulsory excess is $500, and your voluntary excess is $500, then your out-of-pocket excess payable would be $1,000, while your insurance company would pay the rest of the $2,000. Why Pay Voluntary Excess? Why then would anyone want to pay more excess instead of enjoying more money from an insurance claim? Lower premium : The number one reason people might opt for voluntary excess is because it reduces your car insurance premium.

By choosing to pay a higher excess amount, you demonstrate to the insurance company that you are willing to take on a greater share of the financial risk, and in return, they usually offer you a lower premium upfront. Safe driver : If you consider yourself a safe driver, and have confidence in driving accident-free, you may choose to go with paying a higher voluntary excess and keep your premiums lower.

Low-risk customer : A higher voluntary excess incentivises you to handle small repairs out of pocket instead of making minor claims.
This helps you to maintain a claims-free record, and shows insurers that you’re a low-risk customer.
It will help you to obtain car insurance in future at more favourable terms and premiums than it would be for a high-risk driver.

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Which Car Insurance Excess Should You Choose? Now that you’re familiar with both what compulsory excess and voluntary excess mean, your next question might be: Which car insurance excess should I choose? The best way to go about deciding is to consider the following three factors.

Nowing your answers to these three questions will help you determine which car insurance excess is right for you: Question #1: What is the value of your car? If your car is relatively inexpensive or an older car model, it may be more cost-effective to opt for a higher voluntary excess, since the probable cost of repairing or replacing an older car may be quite manageable.

However, if you have a brand new car, and you want to keep it in tip-top shape, then you may require more financial help from the insurance company so that you can afford the necessary repairs or replacement if an incident occurs. Question #2: What kind of a driver are you? Think about your driving history, experience, and the likelihood of making a claim.

If you’ve always been a cautious driver with a clean record, and usually drive in safe areas, then a higher voluntary excess might be a viable option.
If you’ve had your fair share of accidents, or you often drive in high-risk areas of dangerous weather conditions, a lower compulsory excess could be more appropriate to mitigate potential financial burdens.

(Note though that your premium might not be as cost-effective, though!) Considering the environment you usually drive in can also help you decide on which sort of excess in car insurance to get. Question #3: What is your budget like? Consider your comfort level and risk tolerance when it comes to paying out of pocket in the event of an incident.

Are you financially prepared to take on a huge bill in the form of a higher excess amount? Or would you rather limit your personal expenses in the event of a claim? You should also take into consideration if you would rather save money on premiums now, or potential future costs. All in all, it will depend on you.

Both excess types can help you make sure you’re driving safely and securely with an insurance plan covering all the bases. To better understand which car insurance excess works best for you, feel free to contact our DirectAsia Insurance agents at 6665 5555 or drop us a line here,

When Do You Pay the Car Insurance Excess? In general, you never have to pay the excess if nothing happens, but only when you’re making a car insurance claim. In an event of a car crash or a fire incident, for example, you may be held accountable for causing damage to your own car, in which case you will be liable to pay the car insurance excess.

If it is a car accident that involves a few cars, your insurance company should assist you in figuring out who is responsible and liable for the accident, what factors are involved, and going through your policy documents with you. If it is evident that the harm to your vehicle was done by another party and they take responsibility for it, the excess can be waived.

When you choose to go with the best car insurance company like DirectAsia Insurance, you can count on us to provide you with a claims expert to guide you through the entire claims process.
This has helped our customers so much that we have exceeded a 98% customer satisfaction score.
Pick the Best Car Insurance Excess That’s Right for You! Ultimately, no matter whether you opt for compulsory excess or voluntary excess, having a sound vehicle insurance policy will save you a lot of money in the event of an incident.

Choosing a reliable insurance company that offers you the best deal for your vehicle and personal preferences is the best option. Drive with confidence knowing your car is well insured with DirectAsia Insurance. With DirectAsia Insurance, you can be confident in our agents lending a listening ear to understand exactly what you need, and to help clear up any confusion regarding our comprehensive car insurance policies or anything else you want to know about car insurance excess.

Is it worth getting breakdown cover?

Is it worth protecting my no claims?

Is it worth protecting? – It depends on your personal situation whether it’s worth protecting your no claims discount. If you have five years’ no claims discount, it will significantly cut the cost of your car insurance. You could lose all that for just one accident.

You would also normally lose your discount for being in an accident with an uninsured driver, if you had to make a claim on your own insurance. The opportunity to protect that reduction might initially seem like a no-brainer. By protecting your no claims discount, you’ll be locking in that discount. You’ll continue to pay less on your premium even if you have an accident.

You might still lose your discount if you have a number of accidents in one year though. The trade-off is that you’ll have to pay an additional fee for the protection. It can be tricky to figure out whether buying protection leaves you better off. If you buy protection for your no claims discount, this will add an extra cost to your premium.

But if you have an accident without no claims protection in place, you will lose your discount and end up paying more in future anyway.
The real question is, which will cost you more over time? Unfortunately, there’s no easy answer here.
A lot of the details depend on your driving history and the cost of protecting your no claims discount.

Use a comparison site to check the difference in price for drivers with and without a no claims discount. Then try adding in no claims protection to the quote and comparing this again. This should give you some idea of the difference in price.

Grady A. Lowry