Your excess is the additional money you’d pay your insurer to settle a claim on your policy.
An excess is typically made up of 2 parts: voluntary and compulsory. You have no control of the compulsory part of your excess as this is set by the underwriter. However, you have FULL control over your voluntary excess.
An easy way to think of how to set your voluntary excess is to try to see it from the underwriter’s perspective.
A higher voluntary excess will often signal to the underwriter that you are confident you will not be involved in a claim, but even if you are, you are willing to share the cost of settling any claim(s) on your policy.
Therefore a higher voluntary excess will often significantly reduce the price of your premium.
Having said that, beware going too far! Setting a voluntary excess which is way beyond what an underwriter typically sees, could raise a red flag.
If an underwriter sees you have offered an unusually high voluntary excess, it COULD raise questions about your willingness/ability to pay the TOTAL excess should it become due.
One indication that you’ve gone too far with your voluntary excess is that the price of the premium will either be unchanged or may actually increase!
