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Car insurance compulsory and voluntary excess explained

Everyone knows about car insurance excess. Most people know that you can change it to lower your car insurance costs.

But not everyone knows what it’s for and the difference between voluntary and compulsory excesses. Here we clear things up a little with our guide to this important bit of car insurance jargon.

Person driving their car


What is car insurance excess?

Your car insurance excess is a fixed amount that you have to fork out if you make a claim.

So, if your excess is £250 and you make a claim for £1,000, your car insurance provider might keep the first £250. That leaves you with the remaining £750.

Your excess is made up of a compulsory excess and a voluntary excess.

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What does voluntary excess mean?

A 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 because it’s likely to 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 that, if you make a claim, you might have to pay both the voluntary and compulsory excess. This means it’s important not to set an amount that you would struggle to pay.


What does compulsory excess mean?

Your compulsory excess is set by your insurance company - this is set in stone and there’s no opportunity to change it.

If you’re a young or inexperienced driver, don’t be surprised if your compulsory excess is higher than someone who's older or has been driving for a while.

This is because new and young drivers fall into a higher-risk category, so there’s usually an extra excess added. This should be clearly noted on your policy, though.

You might also have an additional excess to pay if you drive a luxury or high-performance car.


What’s the difference between voluntary and compulsory excess?

The compulsory excess is a fixed amount that you must pay towards the cost of a car insurance claim. A voluntary excess, on the hand, is an amount you agree to pay on top of this to reduce the overall cost of your insurance.

When you take out 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?

Absolutely - it’s an amount you agree with the insurance company.

During the quote process you should be able to experiment with different voluntary excess amounts and see what impact it has. 


Should I increase my voluntary excess?

Increasing your voluntary insurance reduces the cost of your car insurance quote, but increases the cost of making a claim. This means you need to strike a balance. 

One way of looking at voluntary excess is that you’re putting a bet on how likely you are to not make a claim*. The higher your excess, the higher the bet.

Consider yourself to be a careful driver with a low chance of being involved in an accident? You might be more confident in taking on this risk and could use it as a way of cutting your insurance costs.

If you do increase your voluntary excess, it’s important to remember that it may reduce your likelihood of claiming and mean you foot more repair bills yourself.

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 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 is deemed to be someone else’s fault, your insurer might decide to pay your claim in full and waive your excess.

This isn't set in stone though, so check the T&Cs 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 security. The harder your car is to steal, the less of a risk it is.

  • Be accurate with your mileage. Overestimating how much you drive could make you pay over the odds.

  • Always shop around. Letting your car insurance auto-renew could cost you a pretty penny.

  • Update your policy. No longer commute to work in the car? Let your insurer know and it could save you some cash.


How is excess insurance different to voluntary and compulsory excess?

Just to add to the confusion is motor excess insurance. This isn’t an excess, but a standalone insurance policy that covers the cost of any excess that you may need to pay on a car insurance claim. 

They’re often popular among new drivers who often have large compulsory excesses on their car insurance.


* This is purely for illustrative purposes. Insurance doesn’t work like that in real life - it’s much more complicated and involves a lot of spreadsheets.