UK drivers are paying an incredible £2.36 billion in excess every year on top of the £8.5 billion they already fork out on their annual car insurance according to figures released by u-Switch, the online price comparison and switching service.
Following the release of the new figures, u-Switch have warned that what appears to be a clever savings exercise can in reality become an expensive problem. For example, a saving of less than £100 on a car insurance
premium could end up costing more than ten times this amount in the event of a claim.
Currently, every car insurance policy carries an average ‘involuntary excess’ of around £79 - which must be paid for by the policyholder in the event of a claim.
And while this alone is not a huge expense, the research shows that on top of this, half of all drivers are also opting for a ‘voluntary excess’ which can vary from an average of £167 to anything up to £1,020.
Aron Thompson, Head of Insurance at uSwitch.com comments on the findings: “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.
“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.”
And while many consumers do not consider car insurance excess to be an issue as they only ever have to part with this money in the event of an accident, further analysis has shown that a combined excess of £1,079 leads to a premium reduction of just £97 (25%).
Thompson concludes: “As always, shop around and make sure you fully understand the policy, the terms and conditions and any money you are expected to pay in the event of an accident. If you are an extremely low risk driver, a high excess may not present a problem but, beware, it still is a gamble.”
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