Choosing the right car insurance is an integral part of vehicle ownership. However, sometimes it’s hard to sift through the jargon. Do you understand exactly what you’ll have to pay in the event of an accident?
One of the least understood areas of car insurance is your excess. This is essentially the amount of money you pay out of your own pocket if you make a claim. It comes in two different forms: compulsory and voluntary.
While compulsory excess is set by your insurer, voluntary excess is your own decision. It’s an additional amount you choose to pay on top of the minimum contribution required. Now it might seem counter-intuitive to opt into footing more of the total cost of the claim yourself. That’s what insurance is for, right?
Hear us out. By agreeing to a larger excess, you’ll lower your premium – so as long as you don’t make a claim, it can be a great way to save money. Over the course of the years, you could actually save thousands of euros.
How much voluntary excess should I pay?
Just like many decisions around insurance, choosing voluntary excess is all about perceived risk levels. Only this time, it’s not based on how much of a risk your insurer judges you to be. It largely comes down to how confident you are in your own driving.
An example should clear it up a little. Let’s say your compulsory excess is €100 and you add a voluntary excess of €150. If you have to make a claim, you’ll then have to pay €250 out of your own pocket, and the insurer will foot the rest of the bill.
However, if you had a low voluntary excess of €50, then you’d only have to pay out €150 in the case of an accident.
Why would you choose a higher voluntary excess? Generally, the higher your voluntary excess, the lower your insurance premium will be. Equally, a lower voluntary excess will mean you pay more for your insurance overall. Working out which one to go for is a personal choice, depending on how likely you think it is you’ll have an accident.
There’s also the factor of how much disposable income you have to spend. If you’re fairly confident you’re unlikely to have an accident and have savings to cover the consequences if you do, you’re more likely to benefit from a higher voluntary excess.
To generalise, this is why often more experienced drivers tend to raise their voluntary excess. Not only are they usually less likely to have an accident, they often have greater financial stability without the help of their insurer. On the other hand, younger drivers may have less disposable income and a higher likelihood of incidents, due to having less experience on the road. For peace of mind in these cases, it can make sense to pay the higher premium and avoid voluntary excess altogether.
Can I get insurance without a voluntary excess?
Yes! Compulsory excess is the cost that you can’t change, while voluntary is an optional add-on. What’s important to note, however, is that ‘voluntary’ refers to the choice you make at the point of signing up for your insurance policy. Once you’ve agreed to this amount, it’s non-negotiable. You’ll have to pay it at any point that you make a claim.
Bear in mind that voluntary excess is an additional cost, not an alternative one. Make sure you can afford the total sum, (compulsory and voluntary) as you’ll always be required to pay it. It’s not a matter of choosing one or the other.
With most insurers, you will only need to pay your excess (voluntary and compulsory) in the event of a claim where you’re at fault. For example, if you caused an accident, then you’ll have to pay your excess before your insurer will cover the remaining cost of the damage.
If another driver admitted that they were at fault, making a claim won’t be necessary, so you won’t need to pay any excess at all. Their insurer will cover the full amount. What’s more complicated, however, is a situation where it’s not clear who’s at fault. If you need to make repairs before this has been established, you’ll have to claim on your insurance. This will involve you paying your excess.
However, you’ll then get refunded if the dispute is settled in your favour. Or, if someone else is making a claim against you, your insurer will cover it but you won’t have to pay excess.
Insurers will usually ask you to pay your excess upfront to start the claims process. But this isn’t always the case. Sometimes it will be deducted from your total repair bill at the end of the claims process. This way, you won’t need to send them a large sum of money – you’ll just receive less towards the repairs. In either scenario, you won’t be able to pay the amount in instalments – so make sure you have the equivalent of your chosen excess put to one side in case you need it. It’s a financial burden you should be comfortable with bearing in the unfortunate event that you are involved in an accident.
Getting an insurance quote
Feeling clued up on all things voluntary excess? The next step is to request a quote for your car insurance. Maintain an open mind and consider all your options fully. Campion will let you know how much a higher or lower voluntary excess will affect your premium, across a range of trusted insurers – so you can make the right choice without doing the hard work. And if you have any further questions, don’t hesitate to call us on 1800 300 301. One of our knowledgeable advisors will be happy to help.
Campion Insurances Limited trading as Campion Insurance, PIB Global, Bestquote.ie, Future, Venture and ISME Insurance Services is regulated by the Central Bank of Ireland. Registered Office: Otter House, Modern Plant Building, Naas Road, Dublin 22. Company registration no. 269654