If you live in the United Kingdom (UK), chances are that you are familiar with the term voluntary excess car insurance. In the United States, we use the term “deductible” instead of “voluntary excess,” but the concept is generally considered the same. If you live in the United Kingdom and are looking to get a lower rate on your insurance, you could opt for the voluntary excess so that you get lower premium payments. If you are reading this article and are from the U.S. – think of taking the excess as being similar to taking a higher deductible so that you save more on your premiums.
If we start comparing the United States to the United Kingdom in terms of insurance, most of the laws and requirements are the same. There obviously are going to be some basic differences in regards to terminology used to describe policies, but most companies operate the same way: they assess your risk as a driver, and give you a quote in accordance to the level of risk that you pose. If you are a driver in the United Kindgom that doesn’t fully understand what “voluntary excess” means on your insurance policy, keep reading.
What is Voluntary Excess Car Insurance?
Getting voluntary excess on your policy in the UK basically means that you agree to pay extra money in advance towards your insurance policy. This money is useful because it goes towards a set cost of damages caused to your vehicle before your insurance company pays forth any money. Think of it as a mini-fund that you are putting money into that will help pay for anything that goes wrong with your car.
Different companies have different limits for “voluntary excess” coverage. Some companies may allow you to pay over £1,000 for your excess. Most of the time though, companies will let you pay whatever amount you think is appropriate based on your financial situation. If you have a lot of money and want to save on your premiums, you may want to put down over £1,000 towards this type of coverage. On the other hand, if you don’t have much money to put down in advance, you may want to shoot for something less than £500.
Why does it help to put more money towards voluntary excess?
If you put more money down for voluntary excess coverage, you will save money on your premiums. Why? Because it’s basically like a down payment that minimizes risk for your insurance company. If you are involved in an accident, they take money out of your voluntary excess coverage first to repair the damages, then they pay the rest based on the policy that you purchased.
Some would argue that it is better to put down more money for voluntary excess coverage because if you are a good driver, you will be rewarded by paying significantly lower premiums. The amount you save will depend on the company that you are with, as well as your already-established risk profile. If you are a low risk client, you will save a lot more than someone with greater risk. Additionally, your insurance company will take a look at the type of car you operate so that they can estimate the costs to repair it if you are involved in an accident.
Voluntary Excess vs. Compulsory Excess
A lot of people get confused when trying to distinguish between “voluntary excess” and “compulsory excess” on their insurance policy. The fundamental difference between the two terms is that if you get “compulsory excess” it means that you were required to have the excess as an addition to your policy; it was non-negotiable. Voluntary excess is traditionally considered “optional” and most drivers are allowed to choose how much extra they would like to pay in order to save money on their premiums.
You are probably wondering why compulsory excess is a requirement, right? Well the reason it is required by some insurance companies is because they want drivers to put their own money down so that they drive safer. Think about it – if you are aware that you have to make a down payment for £400 and the only way to get it back is to avoid an accident, you probably are going to make sure you drive your best. If you didn’t have to pay money in advance, you may not be as motivated to stay safe and may make riskier decisions – so that’s the logic behind the compulsory excess requirement.
How do I lower my compulsory excess?
The only way to lower your compulsory excess is to have driven in the UK for an extended period of time without accidents. If you can prove that you aren’t a high-risk driver and utilize safe driving habits, your compulsory excess will naturally get reduced. If you are a brand new driver in the United Kingdom, you are going to pay a much higher rate (on average) for this aspect of coverage.
There are also some key risk factors that insurers will assess to figure out a fair amount for your compulsory excess. These risk factors include:
- Age – Young drivers will pay more.
- Car – Make and model.
- Driving History – Do you have any speeding tickets or violations?
- Type of Insurance – What type of insurance policy did you purchase?
- Claims – Have you made a large number of claims in the past?
Finding a great car insurance company in the UK
If you want to make sure that you get a good deal on your auto insurance policy in the UK, make sure that you compare rates and find the company that offers the best rate for your money. If you feel that your compulsory excess costs too much, it may be a good option to move on to the next company and see what types of payments they require. Not all companies are going to require you to pay the same amount on your compulsory excess.
In terms of voluntary excess, get as much as you think will be helpful. Make sure you understand the pros and cons of putting down a lot of money on voluntary excess coverage so that you purchase a safe amount. If you have any further questions, be sure to contact an insurance company – they will be able to explain all of your options!