British drivers are risking huge financial liabilities in order to make minor savings on their car insurance premiums, according to new uSwitch research.
Aside from the annual or monthly premium, insurers will set an excess level that the policyholder must pay if they need to make a claim. Most policies will have a compulsory excess, with many also offering a voluntary excess. Many drivers choose to amend this voluntary excess level to help reduce the cost of their insurance premium.
Maximum excess means minor discount
According to the study, 39% of UK drivers (approximately 16 million people) opt for a voluntary excess of between £250 and £1,000. However, choosing a four-figure excess sum reduces the annual insurance premium by just £12 per year compared to a policy with a £250 excess. Those that opt for a £1,000 excess then face paying out an extra £750 in order to make a claim – and that’s on top of any compulsory excess charged by their insurer.
Rod Jones, insurance expert at uSwitch, said: “Worryingly, a large number of drivers are taking on huge financial liabilities in exchange for tiny annual savings on their motor insurance. While many think that opting for a policy with a higher level of excess will save them money, drivers should ask themselves if an additional risk of £750 is really worth an average saving of just £1 a month and would they be put off making a claim knowing they’d have to pay a significant sum for doing so?”
Risk of claiming
While those opting for a high excess may be banking on not making a claim, they are effectively gambling hundreds of pounds. More than one in ten UK drivers (11%) claim on their insurance policy in an average year.
Jones warns: “With more than one in ten of those with a motor insurance policy likely to make a claim each year, we urge those looking to renew or switch their insurance to think seriously about the level of risk they want to take financially before they commit to a new annual policy.”