If you have a car insurance policy, you may already know about car insurance excess. You may also know that you can increase it to lower your car insurance costs.
But not everyone knows what it’s actually for or the difference between voluntary and compulsory excesses. Here, we explain everything you need to know about compulsory and voluntary excess.
What is car insurance excess?
Your car insurance excess is a fixed amount you have to pay if you make a claim.
So, if your excess is £250 and you make a claim for £1,000, your insurer usually keeps the first £250. That leaves you with the remaining £750.
Your excess is made up of a compulsory excess and a 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. Then, choose an amount that you’re comfortable with.
But remember, if you make a claim, you might have to pay both the voluntary and compulsory excess. This means it’s important to set an amount you're confident you'd be able to pay.
What does compulsory excess mean?
Your compulsory excess is set by your insurance company - there’s no opportunity to change it.
If you’re a young or inexperienced driver, your compulsory excess may be higher than someone who's older or more experienced at driving.
This is because new and young drivers fall into a higher-risk category, so there’s usually extra excess added. This should be clearly noted in your policy.
You might also have additional excess to pay if you drive a luxury or high-performance car.
What's the difference between voluntary and compulsory excess?
Compulsory excess is a fixed amount that you must pay towards the cost of a car insurance claim. Voluntary excess is an amount you agree to pay on top of this to reduce the overall cost of your insurance.
When you arrange your policy, your insurance company should make it clear exactly how much excess you need to pay in the event of a claim.
Can I change my voluntary excess?
Yes, you can change your voluntary excess - it’s an amount you agree with the insurance company.
When you compare car insurance through us, you can experiment with different voluntary excess amounts and see what impact it has.
Our data shows that the most popular voluntary excess is £250 - 62% of our customers chose this amount when they got a car insurance quote.
Should I increase my voluntary excess?
Increasing your voluntary insurance tends to reduce the cost of your car insurance quote, but increases the cost of making a claim.
If you can afford to pay the excess, it’s worth looking at how changing your voluntary excess impacts your insurance costs.
Our data shows that, on average, policies with £250 excess pay £641 for their insurance*.
Depending on how much of a risk insurers think you are, a higher excess might not have much of an impact on your price.
What our motor insurance expert says
“Increasing your voluntary excess isn’t some ‘silver bullet’ to lower your car insurance costs. If you’re already a low-risk driver with a clean driving history, raising your excess might not do much to your costs. But if you’ve got a history of car insurance claims, setting a higher excess might help mitigate your high insurance costs.”
If you do increase your voluntary excess, remember that it could reduce your likelihood of claiming. This means you end up paying more repair bills yourself.
Let's say you have a compulsory excess of £250 and a voluntary excess of £500. That means any claim would have to be worth more than £750 to make it worthwhile.
When do you pay excess on car insurance?
You pay your compulsory and voluntary car insurance excess when you make your car insurance claim.
If you’re only involved in a minor road accident, you might find that your total excess is more than the cost of repairing the car.
This is even more likely if you’ve chosen to increase your voluntary excess. In these cases, you have to decide if it’s worth claiming on your insurance at all.
Remember that you should let your insurer know about any accident you have, even if you don’t claim.
Will I have to pay the excess if the incident wasn’t my fault?
If you make a claim that's deemed to be someone else’s fault, your insurer might decide to pay your claim in full. They may also waive your excess.
This isn't a definite outcome though. So check the terms and conditions of your policy to find out if your insurer does this.
I don't want to change my excess, how else can I lower my insurance?
If you decide that you’d rather not risk taking on a higher excess, there are other ways to lower your car insurance costs:
Improve your car's security: The harder your car is to steal, the less of a risk your insurer considers it as.
Be accurate with your mileage: Overestimating how much you drive could increase your costs.
Always shop around: Letting your car insurance auto-renew could cost you more than you think.
Update your policy: No longer using your car to commute to work? Let your insurer know as it could save you some extra cash.
How is excess insurance different to voluntary and compulsory excess?
Motor excess insurance isn’t an excess. It's a standalone insurance policy that covers the cost of any excess you may need to pay on a car insurance claim.
It's often popular among new drivers who have large compulsory excesses on their car insurance.
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* Confused.com data. July 2022 - June 2023. Comprehensive policies only