Less than half (49%) of UK drivers fully understand the terms voluntary and compulsory excess when it comes to buying car insurance, a study finds.
The knowledge gap widened for younger motorists, as just 17% of those aged between 18 and 24 understood compulsory excess, while less than a quarter (23%) knew what voluntary excess was.
This compared to almost three-quarters of drivers aged over 65 who understood what each type of excess was when asked in Go Compare’s survey.
As well as understanding the elements of their car insurance excess, many were caught short by the value of it too. Only a third (32%) expected to pay a fee for their excess and 12% were surprised by its charge, with a tenth claiming it was more than they anticipated.
What is insurance excess?
Both excesses are included in most car insurance policies, and it means that if you need to make a claim, both voluntary and compulsory payments can be added together to pay for whatever repairs or replacements you need. The total of the two excesses must then be paid upfront or removed from any claim settlement.
Compulsory: Your insurer will decide what the compulsory excess amount is and, once the policy is live, the amount cannot be changed.
Voluntary: This excess amount will be chosen by you, and in return, you may receive a lower premium from your provider. Once agreed, this excess is then paid on top of the compulsory excess amount.
Excess-ive bill
Meanwhile, 7% said they felt a shock when they couldn’t afford the excess amount, leading drivers to resort to drastic measures to make the payments. If they needed to make a claim tomorrow, 8% would be unable to afford the bill from their current account, with more than a quarter (26%) needing to use their credit card to pay it.
The findings come after a separate study this week that showed providers consistently offered poor value for money to drivers.
A total of 70% of insurers analysed by Which? achieved a score of just two stars out of five from customers. Many of the ‘essential’ policies didn’t include some of the most common reasons driving claims, like glass or windscreen damage.
‘You could be in for a shock if you need to make a claim’
Tom Banks, Go Compare’s car insurance spokesperson, was concerned about the cost of excess catching drivers off-guard.
“Excess is clearly still one of the most misunderstood areas of insurance. No one wants to spend more time or money than they have to when they’re buying a policy, but it’s worth taking a bit of time over the details when you’re shopping around to make sure you understand what you’re purchasing as you could be in for a shock if you need to make a claim”, he said.
Banks added: “Opting for a larger voluntary excess to get a cheaper policy may seem like a good option, but it is important to make sure that you could pay the excess if you had to. Comparing your options, taking into account the different excess amounts is a good way to make sure you are getting a policy that you understand and provides the cover you need.”
