When you buy car insurance, you’ll see two types of excess mentioned: compulsory and voluntary. Understanding how they work together can help you manage your policy and potentially save money. It’s a balance between paying less upfront and being prepared for a claim.
The compulsory excess is a set amount that your insurer decides. You cannot change this figure. It’s often set higher for drivers who are younger or have less experience on the road. This is because insurers see them as a higher risk. The voluntary excess, on the other hand, is an amount you choose to add. You agree to pay this extra amount towards any claim you make. The total excess is simply the sum of these two figures. For instance, if your compulsory excess is £250 and you choose a voluntary excess of £250, your total excess would be £500. This means if you make a claim, you would pay the first £500 of the cost.
What is Voluntary Excess in Car Insurance?
Voluntary excess is the amount you agree to pay towards any claim you make on your car insurance. It’s an optional addition to the compulsory excess, which is set by the insurer. You decide how much voluntary excess to add, and this choice directly impacts your annual premium. The higher the voluntary excess you choose, the lower your insurance premium will typically be. This is because you are taking on more financial risk yourself. Insurers see this as a sign of a more careful driver. They might offer you a discount on your premium as a result.
If I were in this situation, I’d want to check my savings first. I’d make sure I had enough put aside to cover the total excess I was considering. This way, I wouldn’t be caught out if I needed to make a claim.
Why Setting Your Voluntary Excess Matters
The amount of voluntary excess you choose plays a significant role in your car insurance costs. Insurers use it as a way to gauge your risk. Drivers who opt for a higher voluntary excess are often seen as more responsible. They are willing to take on more of the financial burden if something happens. This can lead to a noticeable reduction in your annual premium. For example, increasing your voluntary excess from £200 to £400 could potentially lower your yearly insurance bill. However, it’s crucial to remember that this is an amount you would have to pay if you make a claim. You must be sure you can afford to pay the total excess, including both compulsory and voluntary amounts, when you need to.
A common misunderstanding is that a higher voluntary excess means you’re less likely to claim. While it might encourage some drivers to be more cautious, the primary driver for setting voluntary excess is the premium reduction. It’s a financial decision. You are essentially buying a lower premium by agreeing to a higher potential payout from your own pocket.
For instance, a young driver with a compulsory excess of £500 might consider adding a voluntary excess. If they added £250, their total excess would be £750. This could significantly lower their annual premium. However, they must have that £750 available if they have an accident. This is a real-world complication: the desire for a lower premium must be balanced against the ability to pay the excess when it’s needed.
If you’re a young driver, you might find that your compulsory excess is already quite high. This is often the case for those with less driving experience. In such situations, adding a voluntary excess might not always be the most straightforward way to save money. You need to carefully weigh the potential premium reduction against the increased total excess you’d be responsible for. It’s worth exploring other ways to lower your premium, such as considering telematics insurance, which uses a black box to monitor your driving habits. You can read more about how black boxes affect young drivers.
Common Pitfalls When Choosing Voluntary Excess
Setting an Unaffordable Voluntary Excess
The most significant mistake people make is choosing a voluntary excess they cannot afford. While a higher voluntary excess means a lower premium, you must have the cash available if you need to make a claim. If you set your voluntary excess at £1,000 but only have £500 in savings, you’ll be in a difficult position if you have an accident. You won’t be able to pay the full amount, and this could cause problems with your insurer. Always ensure your voluntary excess, when added to the compulsory excess, results in a total you can comfortably pay.
Ignoring the Compulsory Excess
Some drivers focus only on the voluntary excess they can change, forgetting about the compulsory amount. The compulsory excess is fixed by the insurer and can be substantial, especially for newer drivers. For example, a compulsory excess might be £500. If you then add a voluntary excess of £500, your total excess becomes £1,000. It’s vital to understand both figures to grasp your total financial exposure.
Not Shopping Around for Quotes
Insurers will offer different levels of voluntary excess and corresponding premium reductions. It’s essential to compare quotes from various providers. You might find that one insurer offers a better deal for a specific voluntary excess level than another. Not shopping around means you could be paying more than necessary for your cover. Different companies have different risk appetites and pricing models.
If I were trying to lower my premium, my first move would be to get quotes with a few different voluntary excess levels. I’d start with a modest increase, say £100 more than my current voluntary excess, and see the impact on the premium. Then, I’d try a larger increase to see if the savings are worth the extra risk.
| Excess Type | Description | Impact on Premium |
|---|---|---|
| Compulsory | Set by insurer, cannot be changed. | Fixed contribution to premium calculation. |
| Voluntary | Chosen by policyholder. | Higher voluntary excess usually means a lower premium. |
| Total | Compulsory + Voluntary. | Amount paid by policyholder in case of a claim. |
How to Choose Your Voluntary Excess Wisely
Assess Your Financial Stability
Before deciding on a voluntary excess amount, take a realistic look at your finances. How much money do you have readily available in savings or an emergency fund? This amount should comfortably cover your total excess. If you have £1,000 in savings, setting a voluntary excess of £750 when your compulsory excess is £250 might be too risky. You’d be left with only £250 for any other unexpected expenses after a claim.
Compare Premium Savings
Insurers provide quotes that show the premium cost for different voluntary excess levels. Take the time to compare these. Often, increasing your voluntary excess by £100 or £200 can lead to a saving of £50 or more on your annual premium. However, the savings might diminish as you increase the voluntary excess significantly. You need to find the sweet spot where the savings are worthwhile for the increased risk you’re taking on.
If I were in this situation, I’d want to see how much I could save by increasing my voluntary excess by £200. I’d then compare that saving to the total excess I’d have to pay. If the saving is small, I’d stick with a lower voluntary excess. If the saving is substantial, I’d consider it, provided I had the funds.
Consider Your Driving Record
Your driving history influences the compulsory excess, but it can also play a role in how insurers price voluntary excess options. If you have a clean driving record with no claims, you might be offered more competitive rates for higher voluntary excesses. Conversely, if you’ve had claims in the past, insurers might be less willing to offer significant discounts for high voluntary excesses, or they might impose a higher compulsory excess in the first place.
It’s also worth considering how likely you are to make a claim. If you drive a lot in busy urban areas or have a history of minor bumps, a lower voluntary excess might be more prudent. If you drive very little and park in a secure garage, you might feel more comfortable with a higher voluntary excess.
For those who drive frequently, especially in areas prone to accidents or theft, investing in a dash cam can provide valuable evidence in case of a claim. A device like the Garmin Dash Cam X310 offers 4K recording and parking guard features, which could be beneficial.
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1Review Your Policy DocumentsCheck your current policy to understand your compulsory excess and any voluntary excess you currently have set.
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2Get Multiple QuotesContact different insurance providers and request quotes for various voluntary excess levels.
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3Calculate Total Excess and SavingsFor each quote, add the compulsory and voluntary excess to find the total. Note the annual premium saving.
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4Assess AffordabilityEnsure the total excess is an amount you can realistically afford to pay if you need to make a claim.
Frequently Asked Questions
Can I change my voluntary excess after buying my policy?▾
What happens if I can’t afford my voluntary excess when claiming?▾
Is a higher voluntary excess always better?▾
Does voluntary excess apply to all types of car insurance claims?▾
Choosing your voluntary excess is a key decision when buying car insurance. By understanding the difference between compulsory and voluntary excess, and carefully considering your financial situation, you can make a choice that balances your premium costs with your ability to pay in the event of a claim. If this was useful, you might also want to read Tips for Smart Car Insurance with High Deductibles.
Sources and Further Reading
Are Black Boxes a Curse or a Blessing for Young UK Drivers? — This article explores telematics insurance, which can be an alternative way for young drivers to potentially lower their premiums.
Tips for Smart Car Insurance with High Deductibles — Learn more about strategies for managing car insurance costs when opting for higher excess amounts.
Had an Accident? The UK Driver’s Guide to Claiming Car Insurance — This guide provides essential steps to follow after a car accident, which is when your excess will become relevant.
How to Cut Your Car Insurance Premium in 2026 Without Losing Cover. WeCover, 2026.
