8 August 2007
Drivers in the UK are paying out too much excess on their car insurance every year and are losing out on the benefits of switching insurance provider, research from uSwitch has found.
According to a survey carried out by the independent online price comparison and switching service, despite the fact that motorists pay a combined total of £8.5 billion to ensure their cars are adequately insured, 50% of claimants are often forced to pay out the combined figure of over £2 billion when making a claim on their car insurance.
And uSwitch has now urged customers to consider the true costs of voluntary excess, especially after its research showed that higher voluntary excesses, although beneficial in some cases for reducing premiums, are not always the best option.
A driver with a maximum combined excess of £1,099 would get a refund of £537 from their insurance provider if they made a claim, however, they would lose their two years no-claims bonus and face a much higher insurance premium in consecutive years, the firm found.
"Although price plays a major part for consumers in deciding which car insurance to buy, consumers need to look beyond the lure of a low premium," Aron Thompson, Head of Insurance at uSwitch.com, advised.
"The potential cost savings associated with a policy with a high voluntary excess can easily become an extremely expensive oversight in the event of a claim."
He pointed to the fact that young drivers in particular have excess levels between £300 and £1,020, describing it as a "false economy" in many cases, as a young male driver would be expected to contribute nearly 40% towards the total cost of a claim.
He added: "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."