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Think opting for a big excess will slash your car insurance premium? Think again!

Robin Bowman

Robin Bowman
Feb 2, 2018

Motor insurers have been accused of taking car owners for a ride by not cutting the cost of premiums when bigger excesses are chosen.

Most motorists assume that if you choose a larger excess, it will bring the cost of your car insurance premium down.

The excess is what the you pay in the event of a claim before the insurance policy kicks in.

But research shows there is often barely any difference between the cost of policies with excesses of £500 and those with excesses of £1,000.

Analysts have found that raising the excess from £250 to £1,000 took only £12 off the cost of a premium on average.


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Around 16 million motorists opt for an excess of £250 or more, up to £1,000. That means they are choosing to bear huge costs for as little off their yearly premium as £1 a month.

Ten percent of drivers make a claim each year, which means 1.6 million people could be seriously out of pocket by opting for higher premiums.

Researchers found an average yearly car insurance policy with zero excess costs £368. And that falls to £330 with a £250 excess.

The average cost of a policy with a £500 excess was £318, the same as the average policy with a £1,000 excess.

Experts say one reason higher excesses might not translate into lower premiums is they only apply to damage claims, which don’t make up the lion’s share of insurers’ costs.

The far bigger payouts are made to third parties for bodily injury claims, and excesses don’t count when these are being assessed.

Malcolm Tarling, of the British Association of Insurers, said: "Motor insurance is a very competitive market. It is important to compare the benefits provided by different policies, including the impact of any voluntary higher excess on your premium."

How to make sure you’re not being ripped off

The message then is clear – when you buy any kind of insurance, never second guess what will lead to cheaper, or more expensive, insurance.

Insurance can be calculated in unexpected ways – for example, if you opt for third-party insurance only, this can actually be more expensive than comprehensive.

Have you read: Weird stuff that can bump up the cost of your car insurance

The secret is to always make comparisons – try varying the information and using different combos when you make comparisons for car insurance and get several quotes.

And don't always choose the cheapest either – making sure you have the right policy is more important and can save money in the long run.


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