With car insurance premiums at an all time high, it is vital that drivers understand their insurance policies. When looking for car insurance, naturally – and understandably – the first thing drivers look at is the price. We all love a bargain, however when dealing with car insurance the cheapest deal may not always be the best.
One thing you must take note of is car insurance excess. Not only does insurance excess affect your final quote, it also effects what you are required to pay in the event of an accident.
Many drivers do not completely understand what insurance excess is and why they must pay it. Whether you are a new driver or simply want to know little more about car insurance, we’ve got you covered.
So, what is car insurance excess?
Introduced as a way of preventing drivers from making small claims, car insurance excess is a contribution that you are required to pay if you make a claim on your car insurance policy.
The two most common types of excesses that you are likely to encounter are voluntary excess and compulsory excess. Voluntary excess is the amount you choose to pay and your insurer sets the compulsory excess.
Voluntary excess is the amount you choose to contribute towards the cost of repairs to your vehicle.
How much voluntary excess you are willing to offer is completely your decision. If you aren’t keen on contributing to the cost of repairs to your vehicle then this is the way to go.
However, if it’s the cheapest deal you are looking for, increasing the amount you are willing to pay will reduce your premium. Having said that, do not set your voluntary excess higher than what you can afford. In the event of a claim, the repairer of your car will only return your vehicle once this sum has been paid.
Compulsory excess is set by your insurer and cannot be changed or negotiated, you must pay this fee if your car requires any repairs. Your insurer takes into account a number of factors when deciding your compulsory excess. These factors include the type of car you have (some vehicles cost more to repair), your age and your driving experience.
Not all drivers are required to pay compulsory excess. It usually applies to young or inexperienced drivers that are seen as being greater risk of making a claim.
Once both fees are finalised, the voluntary and compulsory excess are added to give the total amount of excess that you would need to pay in the event of a claim.For example, if you set your voluntary excess at £400 and you are required to pay £100 compulsory excess, the total excess you’d have to pay if you made a claim would be £500.
Should I set a lower or higher voluntary access?
It is impossible for us to advise you on what works best for your circumstances without speaking to you directly. If you consider yourself a cautious driver and do not foresee an accident occurring, you might be tempted to set a higher voluntary excess.
With this mind, if you were to have a minor accident, your total excess might be higher than the cost of repairing the car, meaning you will not be able to claim through your insurance.
Note: Even if you don’t claim, you should always alert your insurer of any incidents.
When should you use your excess?
You will use your excess when you need to make a claim. You should not use your excess for minor damages as repairs are often affordable without the help of your insurance company.
Having said that, your excess is particularly useful for higher repair bills that may be too costly without the help of your insurer. Referring back to the earlier example, if your vehicle repairs set your voluntary excess at £400 and you are required to pay £100 compulsory excess, the total excess you’d have to pay if you made a claim would be £500.
If you can prove that the accident was the fault of another driver, your excess will be refunded, and their insurer will be liable for the cost of repairs to your vehicle.
Now you know what voluntary and compulsory excess on car insurance is, you can make a more informed choice on the right policy for you.