Alyssa Lane
Voluntary excess is an optional payment that you will pay if you make a claim on your home insurance. This is paid on top of your compulsory excess, which is the amount you are required to pay in the event of a claim. The voluntary excess you choose to pay can be as low as zero, but you may find that the more voluntary excess you pay, the cheaper the overall cost of your premium.
| Characteristics | Values |
|---|---|
| Definition | A voluntary excess is an optional payment on top of the compulsory excess that you will pay if you make a claim on your insurance. |
| Purpose | People choose to pay a voluntary excess to bring down the cost of their home insurance. |
| Amount | Voluntary excess can be as low as zero and go up to £400. |
| Affordability | You need to make sure that you will be able to afford both the voluntary and compulsory excess in the event of a claim. |
| Savings | You should choose a higher voluntary excess if your savings are greater than 50% of the increased excess. |
| Disposable Income | You should base the amount of voluntary excess on your disposable income – how much do you have saved in the event of an emergency? |
What You'll Learn
Voluntary excess is optional
Voluntary excess is a way to reduce the cost of your home insurance policy and bring down your monthly payments. The higher the voluntary excess, the lower your premiums should be, as it tells insurers you won't bother making small claims on your policy. However, you need to ensure that you can afford to pay both the voluntary and compulsory excess in the event of a claim. It is also important to note that a high excess only saves you money if you don't make a claim.
When deciding on your voluntary excess, you should consider your disposable income and how much you have saved in case of an emergency. You can choose a voluntary excess of between £0 and £400. For example, if your compulsory excess is £100 and you choose a voluntary excess of £250, your total excess on the policy is £350. If you make a claim for £1,000, your insurer will deduct this £350 from your settlement, and you will receive £650.
It is worth weighing up the pros and cons of paying less each month against paying more in the event of a claim. You may also want to seek financial advice if you are unsure about what you can afford.
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It is paid on top of compulsory excess
Voluntary excess is paid on top of compulsory excess when you make a home insurance claim. This pre-decided amount will alter the amount of money you’ll receive for a claim.
Voluntary excess works in the same way as compulsory excess, but there is one key difference: the amount you pay is chosen by you. You get to decide how much you wish to pay, which can be as little as zero.
The voluntary excess amount you choose to pay will impact the total amount of excess you pay. Your voluntary and compulsory excesses are added together to get your total excess. This is the total amount that gets deducted from your claim payout.
For example, your voluntary excess is £100 and your compulsory excess is £50. You make a claim for roof damage that will cost £1,000 to fix. You’ll need to pay your insurer the voluntary excess, in this case, £100, upfront. The insurer will then automatically deduct the compulsory excess of £50 from the original £1,000 you’ve claimed for. This means that you’ll receive £850 in total to fix your roof.
The more voluntary excess you pay, the cheaper the overall cost of your premium. This is because insurers don’t have to pay out as much in the event of a claim. However, you’ll need to pay both voluntary and compulsory excess when you make a claim, so it’s important to make sure you can afford to pay this amount.
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It can reduce the cost of your insurance
Voluntary excess is an amount chosen by the policyholder to be added to the compulsory excess set by the insurer. The voluntary excess is paid towards the cost of an insurance claim. For example, if the voluntary excess is £100 and the compulsory excess is £50, the insurer will deduct £150 from the total claim payout.
The voluntary excess is an optional amount that can be set between £0 and a maximum amount set by the insurer. The higher the voluntary excess, the lower the insurance premium, as the insurer will have to pay out less in the event of a claim. For example, a policy with a £250 buildings excess costs £157 on average, while a policy with a £0 buildings excess costs £176.
However, it is important to weigh the pros and cons of a higher voluntary excess. While it can reduce the cost of insurance, the policyholder must be able to afford the total excess amount in the event of a claim. If the combined compulsory and voluntary excess is greater than the cost of the claim, it may not be financially viable to make the claim. For example, if the total excess is £600 and the claim is for £700, it may be better to pay the £700 out of pocket rather than lose any no-claims bonuses.
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You need to be able to afford both types of excess
When taking out home insurance, you'll need to consider two types of excess: compulsory and voluntary. Compulsory excess is a set fee decided by your insurance provider, whereas voluntary excess is the amount you choose to pay. Both amounts are added together to get your total excess, which is the total amount deducted from your claim payout.
Voluntary excess can be as little as zero, but you may find that the more voluntary excess you pay, the cheaper the overall cost of your premium. However, you need to be able to afford both types of excess in the event of a claim. For example, if your voluntary excess is £100 and your compulsory excess is £50, you'll need to pay your insurer the voluntary excess upfront. The insurer will then automatically deduct the compulsory excess from the original amount claimed.
The voluntary excess, ideally, shouldn't be of greater value than any claim you may make. This is because it may not be financially viable to claim for minor incidents, as the combined excesses may cost you more than the item is worth. For instance, if your television screen cracks, you might be better off buying a new TV and avoiding making a claim.
It's important to do the maths and figure out the best balance between lowering your insurance premiums and your ability to afford to make a claim. A high excess saves you money only if you don't make a claim.
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It can be as low as £0
Voluntary excess is an optional payment that you will pay if you make a claim on your insurance. It is paid on top of your compulsory excess, which is set by your insurance provider. The amount of voluntary excess you pay is chosen by you and can be as low as £0.
When you make a claim, your insurance provider will deduct both types of excess from the amount it pays out to you. For example, if you make a claim for £1,000 and your compulsory excess is £250 and your voluntary excess is £0, your insurer will deduct £250 from your settlement and give you the remaining £750.
Choosing to pay a higher voluntary excess could mean that your home insurance costs are lower. This is because insurers don't have to pay out as much in the event of a claim. However, you need to make sure that you will be able to afford both the compulsory and voluntary excess in the event of a claim. It is important to weigh up the pros and cons of paying less each month against paying more in the event of a claim.
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Frequently asked questions
Voluntary excess is an optional payment that you choose to pay if you make a claim on your insurance. This is paid on top of your compulsory excess, which is the amount you are required to pay in the event of a claim.
No, you don't have to pay a voluntary excess – it's called "voluntary" for a reason! However, people choose to pay a voluntary excess, on top of their compulsory excess, to bring down the cost of their home insurance.
You need to make sure that if you are adding a voluntary excess, you will be able to afford both the voluntary and compulsory excess in the event of a claim.
Voluntary excess can reduce the cost of your home insurance policy and bring down your monthly payments. You should base the amount of voluntary excess on your disposable income – how much do you have saved in the event of an emergency?
It’s always worth weighing up the pros and cons of paying less each month against paying more in the event of a claim. We would recommend taking financial advice if you are unsure about what you can afford.
