Don't Exceed Sensible Car Insurance Excess Levels

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MoneySupermarket.com

Apr 24, 2012, 03:39 ET

CHESTER, England, April 24, 2012 /PRNewswire/ --

  • Selecting a higher voluntary excess on your car insurance may cost motorists more in the long term, warns MoneySupermarket

Motorists opting for a higher voluntary excess level to reduce the overall cost of their car insurance premium, could fork out more in the long run, according to MoneySupermarket.com, and in some cases the impact on premium prices is minimal.

Research from Britain's number one comparison site analysed the cost of car insurance using a range of voluntary excess levels, from £0 to £500, to evaluate the effect on premium prices.

The research showed a difference of around £190 to the annual cost of a premium when comparing the average cost of a £0 excess (£653 overall premium price) to a £500 excess (£463 premium)[1]. However, opting for a lower cost upfront and setting an excess level of around £500 could be a costly false economy should you need to make a claim. The difference in premiums is only £25 when comparing a £200 excess (£496 total premium cost) to a £400 excess (£472 premium cost).

Peter Harrison, car insurance expert at MoneySupermarket, said: "Motorists looking to cut costs may assume altering the voluntary excess level to a higher amount will result in a lower premium price. But motorists beware: this isn't always a cost effective option.

"The amount of voluntary excess on a policy is the money you are willing to pay should you need to make a claim, in addition to any compulsory excess the insurer will add - the combined excesses could be several hundred pounds.  It's crucial to set the total excess at a level you can afford to pay, and one which makes making a claim worthwhile. For example, if you had a £100 total excess and claim for £500, you would pay the first £100 and the insurer the remaining £400. With a £500 total excess, you would pay the entire amount, making a claim pointless. It's quick and easy to check the excess level when researching insurance policies so ensure you're aware of the total excess level before you purchase.

"Our research also shows that increasing the excess levels on motor insurance, in some cases, can have a minimal impact on prices. For example, the difference between the average car insurance price for a policy with a £200 excess and one with a £400 excess was just £25; so someone looking for car insurance needs to consider whether the short term savings are worth potential higher costs in the future, should you make a claim."

Notes to editors:

1. Cost of a car insurance premium

Based on a 40 year old male teacher in Manchester (M20) driving a 2009 Ford Focus 1.6L, 10,000 miles a year with 5 years NCD. Car parked on driveway.

             Premium   Premium   Premium   Premium   Premium   Premium   Premium
             Excess    Excess    Excess    Excess    Excess    Excess    Excess
              GBP0     GBP100    GBP200    GBP250    GBP300    GBP400    GBP500
       1    GBP512.83 GBP437.47 GBP408.98 GBP391.98 GBP387.91 GBP365.93 GBP348.91
       2    GBP534.50 GBP451.92 GBP415.60 GBP413.50 GBP413.03 GBP393.92 GBP376.90
       3    GBP581.94 GBP479.91 GBP436.97 GBP419.97 GBP415.90 GBP410.85 GBP408.62
       4    GBP589.59 GBP529.93 GBP493.07 GBP482.60 GBP473.46 GBP466.52 GBP460.45
       5    GBP604.50 GBP545.11 GBP507.97 GBP497.50 GBP488.36 GBP481.42 GBP475.36
       6    GBP632.43 GBP549.20 GBP517.85 GBP515.22 GBP510.49 GBP503.19 GBP496.83
       7    GBP642.36 GBP550.14 GBP525.36 GBP519.26 GBP514.77 GBP510.92 GBP497.14
       8    GBP648.87 GBP564.10 GBP531.07 GBP520.08 GBP516.22 GBP512.04 GBP509.28
       9    GBP805.60 GBP590.02 GBP537.42 GBP530.00 GBP522.58 GBP513.17 GBP510.12
      10    GBP976.26 GBP606.32 GBP592.54 GBP584.06 GBP575.58 GBP563.92 GBP548.02
    Average GBP652.89 GBP530.41 GBP496.68 GBP487.42 GBP481.83 GBP472.19 GBP463.16

Sourced by moneysupermarket.com 18.04.12

MoneySupermarket.com's top tips for getting a cheaper car insurance quote:

  • Fit an alarm: Fit an approved alarm and immobiliser, such as a Thatcham 1 or Thatcham 2. All improvements to security should help to lower your car insurance costs. Some insurers could even insist on sophisticated tracking devices before they will insure expensive cars.
  • Use a 'black box' - many insurers now offer 'black box' technology which monitors your driving habits and rewards good drivers through lower premiums.
  • Change your excess: Changing the excess you are prepared to pay on any claim may reduce the premium. With voluntary excess the more you are willing to cover yourself in the event of an accident the lower your premium. However, this can be a false economy as the cost of making a claim, may be far greater than the difference in premiums.
  • Check your mileage: Check your mileage to make sure you are not paying extra for miles you are not covering in your car. If, for example, you change jobs and have a shorter commute to work you could be saving money. Try and work out how many miles you will genuinely cover - but don't get it wrong as inaccuracy could jeopardise your claim.
  • Minimise your optional extras: Only select to have a courtesy car or legal expenses if you really need them, as they may increase your premium. The less your motor insurance company has to provide in the event of an accident, the lower your costs.
  • Be careful where you park: Keep your car parked in a locked garage overnight if you can - this can help reduce the premium. More than 50% of vehicle thefts occur during the night so if your car is safely locked away it makes sense that your insurance costs will be reduced as a consequence. If you don't have access to a garage, then parking on a driveway is generally considered a lower risk than parking on the road. It's less likely that vandalism, theft or accidental damage will occur when you're off the highway.
  • Add a partner or parent to your policy: Adding a partner or a parent to your policy details may reduce the cost of your premiums, a particular benefit to younger drivers. However, don't add a parent as the main driver if you are the main driver of the car as this will invalidate your insurance.
  • Opt for smaller engine sized car: Insurers calculate premiums based on a number of factors, but the type of car you drive, and the engine size of the car will impact premium prices. Opting for a smaller car with a small engine will give cheaper premiums.

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SOURCE MoneySupermarket.com