Finding the right car insurance can be a minefield. Drivers need to make sure to understand the small print so they are confident they have the correct cover for their circumstances.
But new research has revealed that 60 per cent of drivers don’t fully understand the meaning of compulsory and voluntary excess.
The poll by Go.Compare Car Insurance has revealed many drivers are unsure about key motor insurance terms. And that includes confusion over what the insurance excess actually mean.
The lack of knowledge for these key terms means that six in ten could face a shock if they need to make a claim.
Here’s everything you need to know about compulsory and voluntary excess so you don’t find yourself caught out.
What is car insurance excess?
Your car insurance excess is a fixed amount you have to pay if you make a claim.
So, if your excess is £250 and you make a claim for £1,000, your insurer usually keeps the first £250. That leaves you with the remaining £750.
Your excess is made up of a compulsory excess and a voluntary excess.
What does voluntary excess mean?
Voluntary excess is an amount you’re willing to pay towards the cost of a claim. The main reason you might agree to do this is that it could reduce the cost of your car insurance.
When you get a car insurance quote, it’s worth looking at how changing the voluntary excess affects your price. Then, choose an amount that you’re comfortable with.
But remember, if you make a claim, you might have to pay both the voluntary and compulsory excess. This means it’s important to set an amount you’re confident you’d be able to pay.
What does compulsory excess mean?
Your compulsory excess is set by your insurance company – there’s no opportunity to change it.
If you’re a young or inexperienced driver, your compulsory excess may be higher than someone who’s older or more experienced at driving.
This is because new and young drivers fall into a higher-risk category, so there’s usually extra excess added. This should be clearly noted in your policy.
You might also have additional excess to pay if you drive a luxury or high-performance car.
What’s the difference between voluntary and compulsory excess?
Compulsory excess is a fixed amount that you must pay towards the cost of a car insurance claim. Voluntary excess is an amount you agree to pay on top of this to reduce the overall cost of your insurance.
When you arrange your policy, your insurance company should make it clear exactly how much excess you need to pay in the event of a claim.
Can I change my voluntary excess?
Yes, you can change your voluntary excess – it’s an amount you agree with the insurance company.
When you compare car insurance through us, you can experiment with different voluntary excess amounts and see what impact it has.
Our data shows that the most popular voluntary excess is £250 – 62% of our customers chose this amount when they got a car insurance quote.
Motoring expert Tom Banks said: “Excess clearly remains a misunderstood aspect of insurance – and as it can have a considerable financial impact in the event of a claim, this is worrying.
“While no one wants to spend more time or money when buying a policy, it’s important to make sure that you understand the terms and details of your policy
“It can be tempting to opt for an insurance policy with a higher compulsory or voluntary excess in the hope that it will bring down the cost of your premiums, but it’s vital to ensure that you can afford to pay the excess you are committing to.”
It’s the youngest drivers with the least knowledge of the insurance term – only 13% of those aged 16 to 24 said they fully understood the meaning of both compulsory and voluntary excess. Meanwhile, it’s those aged 55 and over with the strongest understanding – 57% said they were confident about what compulsory and voluntary excesses are.
Tom added: “Before purchasing insurance, it’s important to do your research and pay attention to the fine print – including the limits of the policy cover, the excess levels, and any exclusions in place.
“We recommend using a price comparison website to compare policies side by side, as this will help make sure you find the right level of cover, with excesses that you can afford to pay for should you have to make a claim.”
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