A Higher Voluntary Excess Could Increase Your Annual Car Insurance Premium

Written by Editorial Team
Last updated: 26th August 2018

By choosing to pay a larger voluntary excess you could actually push up your premium. Opting in to voluntary excess may reduce your monthly bills, but in the event of a claim, you could end up paying out more than expected.

Shouldn’t a higher voluntary excess make it cheaper? 

Whilst many drivers consider it cheaper to take out a voluntary excess, insurers are adding their own compulsory excess, and it means when you do make a claim, you have a larger, non-negotiable fee on top of what you already are due to pay out. This immediately adds to the cost of your accident, and increases your premium.

For example, when you need to make a claim, and you have a high voluntary excess, you will be required to have more upfront cash in order to pay off the excess and the compulsory charge from the insurers. Even though your premium may have originally been lower, it will now have been increased due to the amount you have had to pay out – thus making it more expensive, and giving you a higher annual car insurance premium.

Many drivers will assume that by choosing the highest voluntary excess option, which can reach £1000, they will be saving significantly on their yearly premium costs, however, they will most likely end up paying the same premium as those with a lower excess, although they will end up having to pay out a large lump sum in the case of a claim.

How do I work this out?

When you are researching into the different price comparison websites, be sure to get alternate quotes and look into the affordability criteria.

Work out what you would comfortably be able to pay in the event of an accident. If you are able to find an insurer that is willing to give you a lower premium and a high voluntary excess, it is vital to calculate the affordability in regards to what you will be predicted to pay out in the case of an emergency or an accident.

Average premiums are expected to hit £900 during 2018, which will make the price of vehicles on the road less affordable. Research taken out by Moneywise states that by opting into an excess of £1000, as opposed to a lower amount of £250, you are making a saving of just over £12 over the course of the year. This is before any accidents, so with the added costs of a claim, you will be out of pocket, and loose a large proportion of money.

What else to consider?

Choosing the higher voluntary excess to add to the compulsory one that the insurers will set out, could help to bring down the cost of your total insurance premiums, but that will be due to the fact the insurer won’t have to pay out as much.

Sounds appealing; however that means that you will be the one who has to fork out a larger sum of money if something were to happen; so in all cases, ensure the amount you choose is one that is affordable if you did have to make a claim, and consider how much you will end up paying in the event of an accident.