What is excess in car insurance? Find out about the types of insurance excess such as voluntary and compulsory excess in relation to car insurance premiums when you buy car insurance, and how it can help you cover the cost of repairs in the event of a car insurance claim. For young and inexperienced drivers, understand how paying a higher voluntary excess can help you mitigate higher car insurance premiums.
Car insurance can often be a confusing subject for many people and understanding how excess works is one of the most perplexing aspects. In this blog post, we’ll explain exactly what car insurance excess is, why it exists, and what you can do to lower your costs.
Excess is the amount that an insurance policy holder will have to pay towards any claim they make on their car insurance. The higher the level of excess on a policy, the lower the cost of premiums; however, this also means that if you have to make a claim, you will have to pay more out of your own pocket. Generally speaking, there are two types of excess – compulsory and voluntary – and we’ll look at both below.
Compulsory Excess
Compulsory excess is set by the insurer when providing cover and it is not something that a policyholder has any control over. It reflects costs associated with servicing claims such as administration fees or part of a claim payment due to fraud prevention. This type of excess amounts vary significantly between insurers so it pays to shop around and compare quotes before selecting an insurer.
Voluntary Excess
Voluntary excess is agreed upon between an insurer and its customer when purchasing cover and it helps reduce overall premiums so long as claims aren't frequent. It's important to note that if you decide on opting for voluntary excess then it may be required as part of any future claims made- even if they are not caused by the policyholder themselves. It is also important to note that voluntary excess is typically used as a mechanism to lower your upfront insurance premiums - which may make sense if you are a young driver below 25 year old and have been quoted with a fairly expensive insurance premium.
Finally, when deciding how much car insurance you need it’s important to consider both compulsory and voluntary excess levels together before making a choice about which one best suits your requirements and budget. By doing this you can ensure that you get the best coverage for an affordable price while still feeling secure in your car insurance should anything happen out on the roads.
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