Compulsory car insurance excess is the fixed amount that you must pay towards any claim you make on your car insurance policy. This amount is set by the insurance provider and is a non-negotiable part of the policy. Essentially, it's the portion of the claim that you are responsible for paying before the insurance company covers the rest.For example, if you have a compulsory excess of £100, and the repair costs for a claim come to £500, you would pay the first £100, and your insurance provider would cover the remaining £400.The purpose of compulsory excess is to deter small or frivolous claims and to share some of the risks with the policyholder, which can lead to reduced premiums.
Voluntary Car Insurance Excess refers to the amount of money that a driver agrees to pay towards any claims they make on their car insurance policy. In the UK, car insurance policies typically have a compulsory excess, which is a fixed amount set by the insurance company. However, drivers also have the option to choose a voluntary excess, which is an additional amount that they are willing to contribute towards a claim.
The purpose of having a voluntary car insurance excess is to potentially lower the overall cost of the insurance premium. By agreeing to pay a higher excess, drivers demonstrate that they are willing to take on more financial responsibility in the event of an accident or claim. This can be seen as a way to show the insurance company that the driver is less likely to make small or frequent claims, which may result in a lower premium.
For example, if a driver has a compulsory excess of £250 and chooses a voluntary excess of £100, and then makes a claim for £1000, they would be required to pay a total excess of £350 (£250 compulsory + £100 voluntary) before the insurance company covers the remaining £650.
It's important for UK drivers to carefully consider their voluntary car insurance excess as it can affect the cost of their premium. While opting for a higher voluntary excess may lead to lower premiums, it also means that drivers will have to pay a larger sum out of pocket in the event of a claim. Therefore, it's crucial to strike a balance and choose an excess amount that is affordable and appropriate for individual circumstances.