Do you understand your insurance excess?
Just over 2,000 people took part in the survey which found that 36% of motorists just go for the cheapest price when they’re buying an insurance policy. When it came to younger drivers aged 18 to 34, only 9% said they check the excess levels of their car insurance.
Those surveyed were also asked about their understanding of various car insurance terms. Just under half (47%) of those who took part claimed they fully understood voluntary and compulsory excesses, but this dropped to 18% for those aged between 18 and 34.
The excess on an insurance policy is the amount a policyholder is required to pay out themselves before further costs can be claimed from the insurer. This should be discussed clearly by your bear river insurance broker.
Looking at those who had made a claim on an insurance policy, 12% told GoCompare they didn’t know that they’d have to pay the excess as part of that claim, and a further 7% said that the excess came as a ‘nasty shock’.
Ryan Fulthorpe, GoCompare’s car insurance spokesperson, said: “The research shows that excesses, along with other various insurance terms, are still one of the most misunderstood areas of insurance. With 36% of people not even being aware of the amount their current insurance excesses are, it’s no surprise that more than one in 10 (13%) people who had to make a claim, said the excess was more than they expected.
“No one wants to spend more time or money than they have to when they’re buying insurance but it’s worth taking a bit of time over the details when you’re shopping around to make sure you understand what you’re purchasing. Knowing the excess you will need to pay if you need to make a claim is really important as excess amounts can vary significantly.
“If you think you’re only paying £150 but then the excess bill comes in at £500 – how could you afford that? Our survey found that 8% of those who had to make a claim, couldn’t really afford to pay the excess, and so these are the things people should be thinking about when they take out a policy.”
How does an excess on a car insurance policy work?
An insurance excess is made up of a compulsory and voluntary excess amount. If the policyholder makes a claim, the two are added together and must be paid upfront or deducted from any settlement in the event of a claim.
The compulsory excess is set by the insurer and can’t be changed, but the voluntary excess amount is chosen by the policyholder. In general, the higher the voluntary excess, the lower the insurance premium.
In addition, if someone then needs to make a claim on their insurance policy, the value of that claim must exceed the total excess. For example, if the voluntary excess and compulsory excess are both £250, the total excess is then £500. But if the value of repairs was less than the £500, a customer would not be able to claim.