a person stacking coins on a table

What is Voluntary Excess on Car Insurance?

November 9, 2023

Car insurance can often seem like a maze of jargon and numbers, especially when it comes to understanding the various components of your policy. Among these terms, 'excess' frequently emerges, comprising both compulsory and voluntary elements.

So what is excess? In short, it’s a compulsory fixed sum that you pay your insurance company every time you make a claim. The higher your excess, the lower your monthly payments.

While compulsory excess is quite straightforward, voluntary excess remains a lesser-understood concept. In short, voluntary excess is a means of increasing the fixed sum that you’d pay when making a claim - in exchange for a lower monthly premium. But how does it work, and what’s the catch? Let’s take a closer look.

What is Excess in Car Insurance?

Before diving into the specifics of voluntary excess, it’s essential to grasp the overarching concept of car insurance excess. As mentioned briefly above, an excess is the amount of money you agree to pay towards a claim before your insurance company covers the rest.

For instance, if you have an excess of £300 and the damage to your car amounts to £1000, you'll contribute the first £300, with your insurer taking care of the £700 balance. It acts as a co-payment, ensuring both the policyholder and the insurance company share the responsibility of the claim.

Voluntary Excess Explained

While the compulsory excess is a fixed sum set by the insurance provider, based on factors like the age and experience of the driver, voluntary excess is where the policyholder has some sway. Voluntary excess is an additional amount that you can voluntarily choose to pay on top of the compulsory excess, should a claim arise. You can decide on this figure when taking out or renewing your policy.

Simply put, it's a financial commitment you make, signalling to the insurer that you're willing to shoulder a more significant portion of the claim's financial burden if the need arises.

Purpose of Voluntary Excess

So, you might be thinking - why introduce an extra payment on your end? The primary rationale behind voluntary excess is to offer policyholders a chance to potentially lower their premium costs: by agreeing to a higher voluntary excess, you're essentially telling your insurance provider that you're less likely to make minor claims, and that you're confident about your driving skills and car's safety. In return, insurers often reduce the premium, considering the reduced likelihood of minor claim payouts.

How Voluntary Excess Works

Imagine you have a compulsory excess of £200 and you opt for a voluntary excess of £100. If you then incur damages of £800 in an accident, you'll pay the first £300 (the total of both excesses), while your insurer will cover the remaining £500.

In scenarios where the damages are less than the combined excess – using the previous example, let's say £250 – it might not make financial sense to make a claim. You'd be paying the entire repair cost out-of-pocket, and your insurer wouldn't contribute anything.

Voluntary Excess: Factors to Consider

Financial Capacity

Before setting a voluntary excess, evaluate your finances. While a higher voluntary excess might mean lower premiums, ensure you can afford it if a claim arises.

Driving Habits

If you're a cautious driver, less prone to accidents, you might feel more comfortable with a higher voluntary excess, banking on your safety record.

Car Value and Usage

If you drive a high-value car or use your vehicle frequently, there might be a higher risk of significant damages or frequent minor damages. Adjust your voluntary excess accordingly.

Previous Claims

Reflect on your past claim history. If you've rarely filed claims, a higher voluntary excess could be more economical in the long run.

Two person talking with the person on the left pointing at a document using a pen

Pros and Cons of Voluntary Excess

So, what are the benefits (and disadvantages) that come with opting for voluntary excess? Here are some typical pros and drawbacks:


  • Lower Premiums: The most enticing advantage of a higher voluntary excess is the potential reduction in your insurance premium - this can put extra cash in your pocket every month.
  • Flexibility: Unlike compulsory excess, you have the choice to determine your voluntary excess, giving you more control over your policy costs.
  • Reduced Small Claims: With a higher excess, you might decide not to claim for minor damages, thus safeguarding your no-claims discount.


  • Higher Out-of-Pocket Costs: In the event of a claim, you'll pay a more significant sum before your insurance kicks in.
  • Potential Financial Strain: If an accident happens unexpectedly, the high excess could strain your finances, especially if you haven't set aside funds.
  • Overestimation: There’s a risk of being too optimistic about your driving safety and setting an excess that’s too high.

Tailoring Excess to Your Needs

While it's tempting to hike up your voluntary excess for the allure of lower premiums, it's crucial to tailor it to your individual circumstances:

  • Risk Assessment: Honestly evaluate your driving habits. If you're frequently on the road or drive in high-risk areas, a lower voluntary excess might be more prudent.
  • Savings Consideration: Always ensure you have sufficient savings to cover the combined compulsory and voluntary excess. It ensures you're not financially strained in the event where you need to make a claim.
  • Annual Review: Like any aspect of life, circumstances change, so it's advisable to reassess your voluntary excess during policy renewal or if significant life changes occur, like moving homes or changing jobs.

How Voluntary Excess Affects Premiums

Put simply, the relationship between voluntary excess and premiums is a seesaw balance. Typically, a higher voluntary excess will result in a lower premium, because the insurer perceives you as a lower risk for small claims.

On the other hand, a lower voluntary excess usually equates to a higher premium, as the insurance company assumes more of the risk. However, this reduction in premium isn't always proportional. Doubling your voluntary excess might not halve your premium, so it's wise to ask for various quotes to determine the optimal balance.

Changing Voluntary Excess

Over the duration of your policy, if you feel the need to adjust your voluntary excess, the best option is to simply contact your insurance provider; while some insurers might allow changes mid-policy, others may only permit modifications at renewal. It's also essential to read the fine print and be aware of any administration fees associated with making such changes.

Key Thoughts

Overall,  a thorough understanding of voluntary excess can help you make the best, most informed decisions about your car insurance. While the allure of reduced premiums is undoubtedly attractive, it's incredibly important to strike a balance that safeguards both your financial well-being and your peace of mind. In tailoring your excess to reflect your unique circumstances and by collaborating with a trusted accident management company, you can ensure that you're both cost-effective and protected in the event of a claim.