Taking out the maximum excess on your car insurance could cost over £1,000 if you need to claim
Make car insurance £97 cheaper
Wednesday, 08 Aug 2007 09:42
You can make your car insurance premiums £97 cheaper by taking out the maximum excess on your policy - but be warned, this could cost you more than £1,000 if you need to make a claim.
Car insurance policies in the UK automatically carry an excess figure - the amount of a claim you will have to pay yourself - of around £79.
But research from comparison service uSwitch.com shows some 12.7 million drivers also choose a "voluntary excess" on top of this - which can vary from the average figure of £167 to a maximum of £1,020.
Taking on a larger excess amount saves you money on your premiums, but uSwitch questions whether this might prove to be a false economy.
"For some drivers, particularly those with less experience, a higher voluntary excess on their insurance policy can reduce their insurance premium by up to 40 per cent or by up to £128 a year, but this is not the best option for every driver," said Aron Thompson, uSwitch head of insurance.
"With the average cost of a claim currently at £1,636, drivers with a maximum combined excess of £1,099 have to carefully weigh up whether to make a claim or not.
"Although they would get a refund of £537 from their insurance provider, they would also lose at least two years' no-claims bonus (assuming they had at least two years' unprotected no claims bonus at the inception of their policy) and potentially face a much higher insurance premium the following year.
"There is no benefit for consumers to choose policies that will force them to fund the cost of a claim themselves because the voluntary excess level is too high," he concluded.