Compulsory vs Voluntary Excess Explained
Compulsory excess is a fixed amount set by your insurer that you must pay towards any claim. Voluntary excess is an additional amount you choose to pay on top, in exchange for a lower premium.
Together, they make up your total excess. Excess is one of several factors that feed into how your car insurance premium is calculated. Getting the balance right means you pay less without leaving yourself exposed to costs you cannot afford.
Compulsory excess is set by your insurer and cannot be changed, so the only part you control is the voluntary amount you add on top. Raising it lowers your premium, but only pick a figure you could pay tomorrow without strain. Check the total against your car’s value too, because a high excess on a low-value car can leave a claim barely worth making.
Compare car insurance policies to see how each insurer sets compulsory excess before you commit.
What is the difference between compulsory and voluntary excess?
Compulsory excess is non-negotiable and set by your insurer based on your risk profile. Voluntary excess is optional and chosen by you to reduce your premium.
How does compulsory excess work?
Every car insurance policy includes compulsory excess. Your insurer sets the amount based on your age, driving experience, claims history, vehicle type, and postcode. You cannot change it with that insurer.
Younger drivers typically face higher compulsory excess, often £300 to £500 for under-25s, because young driver insurance reflects higher claim rates in that age group. Different insurers assess the same driver differently, so comparing quotes is the most effective way to find a lower figure.
How does voluntary excess work?
You set your voluntary excess when buying or renewing your policy. Most insurers offer options from £0 to £1,000, with common choices at £100, £250, and £500.
By agreeing to pay more out of pocket if you claim, you signal to the insurer that you are sharing more financial risk. In return, they charge a lower premium.
| Compulsory excess | Voluntary excess | |
| Set by | Your insurer | You |
| Can you change it? | No (but varies between insurers) | Yes, at purchase or renewal |
| Typical range | £100 to £500 | £0 to £1,000 |
| Purpose | Insurer’s risk management | Your tool to lower the premium |
| When you pay it | Every claim | Every claim (added to compulsory) |
How much can voluntary excess save on your premium?
Increasing your voluntary excess typically reduces your annual premium, but the relationship is not linear. The biggest percentage savings come from moving off a very low voluntary excess level.
Where are the biggest savings?
Moving from £0 to £250 voluntary excess often produces a noticeable drop in premium. Going from £250 to £500 still helps, but the saving is usually smaller. Above £500, the returns diminish further.
The exact saving depends on your full risk profile, including your age, vehicle, and no-claims bonus. Younger drivers with higher base premiums tend to see larger reductions from increasing voluntary excess than experienced drivers who already pay less.
Is the saving always worth it?
Not always. If raising your voluntary excess from £200 to £500 saves £40 a year, it would take more than seven claim-free years to recoup the extra £300 you would pay in a single claim.
Run the numbers before committing. Compare the annual premium saving against the extra you would pay out of pocket, then decide whether the trade-off fits your financial situation.
When should you set voluntary excess higher or lower?
The right level depends on your savings, driving habits, and how much risk you are comfortable carrying.
When does higher voluntary excess make sense?
Higher voluntary excess works well if you have enough savings to cover the total excess comfortably, drive low mileage, and have a clean claims history. In that scenario, the premium saving is likely to outweigh the small chance of needing to claim.
It also makes sense if your car’s value is high relative to the excess. A £500 excess on a £15,000 car is a small proportion of its worth. Choosing fully comprehensive cover with a moderate voluntary excess gives the strongest protection in this situation.
When should you keep it low?
Keep voluntary excess low if the total amount would cause financial hardship. New drivers, high-mileage commuters, and anyone without a financial cushion should prioritise affordability at claim time over premium savings. The same applies to young drivers who already face high compulsory excess on top of their voluntary amount.
For low-value vehicles, check whether the total excess approaches the car’s market value. If your car is worth £2,000 and the total excess is £800, the insurer would only cover £1,200 in a total loss. At that point, a claim may not justify the premium cost.
What happens to your excess when you claim?
You pay your total excess, compulsory plus voluntary, towards every claim you make on your own policy. The insurer covers the remainder.
Do you pay excess in a non-fault accident?
Yes. You typically pay the full excess upfront even if the accident was not your fault. Your insurer then attempts to recover it from the at-fault driver’s insurer. If recovery is successful, your excess is refunded, but this can take weeks or months.
Are there exceptions for certain claim types?
Windscreen and glass claims often carry reduced or zero excess. Your policy schedule lists the specific excess for each claim type. Theft, fire, and accidental damage may each have different figures set by the insurer, regulated by the FCA.
Claims are recorded on the Claims and Underwriting Exchange (CUE) database managed by the ABI regardless of the excess you paid. Claims stay on your record for five years and can affect future quotes, so always weigh the cost of claiming against paying for minor repairs yourself.
Making a small claim can also affect your no-claims bonus. If the repair cost is close to your total excess, it is often better to pay out of pocket and protect your discount.
The simplest way to find the right balance between excess and premium is to compare car insurance policies side by side. You will see how each insurer sets compulsory excess and how voluntary excess affects the price.
Frequently Asked Questions (FAQs)
Yes, you typically pay your full excess upfront regardless of fault. Your insurer may recover it from the at-fault driver’s insurer and refund it to you, but this process can take weeks or months depending on how quickly liability is established.
Not always. Windscreen and glass claims often have reduced or zero excess. Theft, fire, and accidental damage may each carry different excess amounts. Check your policy schedule for the specific figures.
No. Your excess level has no bearing on your claims record. Any claim is recorded on the CUE database regardless of the excess you paid, and claims remain on your record for five years.
Most standard car insurance policies allow voluntary excess up to £1,000. Some specialist insurers permit higher amounts. Your insurer will show the available options when you get a quote.
No. Compulsory excess is set by the insurer based on their risk assessment and cannot be changed. However, different insurers set different levels for the same driver, so comparing quotes often reveals lower figures.
Most insurers only allow excess changes at renewal. Some permit mid-term adjustments with an administration fee. If your circumstances change, contact your insurer to ask. Our guide on how to cancel or change your car insurance explains the process.
Excess protection is a separate policy that reimburses the excess you pay after a successful claim. It can be useful if you have set a high voluntary excess to reduce your premium but want to avoid the out-of-pocket cost when claiming.
Not necessarily. Fully comprehensive cover is often cheaper than third-party only for many drivers. Increasing voluntary excess on a comprehensive policy usually produces better overall value than switching to third-party with the same excess.