The difference between a compulsory and a voluntary excess is often misunderstood when it comes to car insurance.
That’s according to research by comparison website GoCompare, which found excess charges were widely overlooked or disregarded by drivers when arranging an insurance policy.
Only 35 percent of drivers surveyed said they checked the policy excess when arranging cover. And worryingly, only 30 percent could afford to pay the excess in the event of an insurance claim.
What is a car insurance excess?
The excess is the amount of money you will have to pay upfront if you make a claim on your car insurance. An excess will be applied to claims for theft, fire damage, at-fault accidents and write-offs.
From the insurance company’s point of view, the aim of having an excess is to deter fraud and false claims. It also helps keep down the cost of insurance by having the policy holder absorb some of the loss in the event of a claim.
There are two types of excess: voluntary and compulsory. Combined, these make up the ‘total excess’, which could add up to a significant sum of money. It’s one of the reasons why you should check the finer details of an insurance quote, and not just the annual premium, before you sign up for a new policy.
Compulsory or voluntary excess?
For example, if the compulsory excess is £500 and the voluntary excess is £250, you’ll have to pay £750 towards the cost of any claim. That’s on top of the cost of your annual premium.
The compulsory excess is set by the insurer and will vary depending on several factors, such as the policy holder’s age, driving experience and the type of car that is insured.
The voluntary excess is chosen by the policy holder and is the amount of money they are prepared to pay upfront in the event of a claim. Paying a higher voluntary excess could reduce your premium, but obviously it will cost more if you make a claim.
It’s also worth noting that insurance companies will only process claims once the excess charges have been paid, regardless of who is at fault.
If the other driver has admitted fault and notified their insurance provider, the excess might be waived. Only when the insurer is certain you’re not at fault will you get the excess payment back.
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