It’s no secret that car insurance can be expensive. In fact, for some people, it can be downright prohibitive. And while most of us are happy to pay our premiums every month to safeguard ourselves and our loved ones, there are a few of us who like to push the limits and see just how low we can go. We take on extra jobs, we cancel our gym memberships, and we try to save as much money as possible.
But one area where we often don’t think to save is on our car insurance. We just assume that our premiums are set in stone and there’s nothing we can do about it. However, this isn’t always the case. There are a few ways that you can save money on your car insurance, one of which is by knowing more about excesses. Another is knowing how to correctly compare car insurance.
In other words, we should know why some policies online are cheaper than others. Excesses are one way that insurers will keep their premiums low and competitive. Apart from compulsory excesses that are applied, you could opt for a voluntary one, if you consider yourself a safe driver who is unlikely to make a lot of claims.
Defining a Policy Excess
An excess is the amount of money that you have to pay towards a claim before your insurer will start to pay. So, for example, if you have an excess of £200 and you make a claim for £2000, you will need to pay the first £200 and your insurer will pay the remaining £1,800.
What Purpose Do Excesses Serve?
Excesses are designed to deter people from making small claims, as they are not worth the hassle for either party. However, they can also work in your favour if you are a safe driver and have never made a claim. You can save on your premiums each year by opting for a higher compulsory excess and also choosing to add a voluntary excess on top.
Disadvantages of Excesses
Of course, there is a downside to having a policy excess with motor insurance. You will have to pay out of your pocket if you do need to make a claim. The good news is that the excess for windscreens is lower than with vehicle damage as this is something that can happen often if you need to drive on motorways or fast roads.
However, the downside of excesses is often outweighed by the savings you can make on your premium. This is because insurers see people who accept higher excesses as being less of a risk because of the extra care they are likely to take when driving. It is a gamble that has to be balanced against the premium you could save and the cost you could avoid if you did have an accident and needed to pay an excess.
Generally, a £100 excess will be included as standard on third-party fire and theft policies. There is more flexibility with comprehensive insurance in terms of vehicle excesses given or chosen. Typically, young drivers will be allocated a higher policy excess to make their premiums affordable. Another way is, of course, for parents to control what type of vehicle a son or daughter is driving. A sporty model or one with a high engine size will significantly increase a premium. This is because insurers already consider young drivers an extra insurance risk and so to add in greater performance in terms of the vehicle driven is to greatly increase the risk compared to older and more experienced drivers.
So, if you’re looking to save money on your car insurance, it is worth considering your excess. Just be sure when you are shopping around that you compare premiums based on the excesses offered.