Are you looking closely at the excess amount when you look at the renewal quotes on your car insurance?
You need to think about watching that car insurance renewal figure closely if you want to ensure that providers don’t overcharge you for it. Over the years, insurance providers have been upping the amount that you need to pay toward a claim by a quarter the past seven years. New studies show that this increase is putting pressure on those paying for car insurance claims, with the cost of compulsory car insurance excess rising above the rate of inflation. There are 67% of drivers that have recently made claims, and they end up having to dig through their savings and even using credit cards to afford the steep fees. There is plenty of research to show that the average excess that has been paid for accidental damage claims have been pushed up by 26%. This has moved from an average of £132 in 2012, to £166 today. It may not look like a lot of money on paper, but it’s one that puts pressure on customers to pay more than they can afford.
Comparison websites have previously calculated that theft excesses, on average, have increased by a massive 25%, and this is over the same period of time. This could be because the number of thefts of vehicles has soared by 50% in the past five years. This is primarily because of the remote theft tactics that are being used, and it’s organised criminals that have this under wraps because of the introduction of keyless motors. Fire-related claims have risen, too, by 24% over the same period of time and this is becoming a big issue for car insurance excess costs.
Any drivers that have had blotted motoring records, that is, the highest excess quotes around, have seen their payouts go up in the past seven years. There have been reports from GoCompare that show that a maximum excess for a car is now peaking easily at £3,000 in 2019, which is a huge rise compared to 2012, where the excess was £475. These costs are pressuring the less experienced motorists on the road, but it’s not always the youngest on the road that has to cope with it. In fact, reports show that drivers who are over 25 with a licence held for less than a year have jumped from £176 in 2012 to £199 today, which is still a sizeable 13% increase. While people assume that younger drivers are more likely to make a claim, it’s not always correct, and the younger motorists out there haven’t been as struck by the increases in costs, though they still pay substantial differences financially.
Car insurance excesses for drivers that are under 21 are still around the £348 mark, which isn’t too much higher than £332 in 2012. This is an increase of just 5%, and the 21-24-year-old age range has an excess of 4% higher, with current costs at £224 compared to 2012’s £216. The reports from GoCompare show that people are concerned that drivers are actually agreeing to the increases. The current voluntary excess that drivers are willing to pay is high, and this is in order to keep their premiums low. While that could work on paper, if there is an accident, this is going to sting drivers across the age groups into paying way more in excess.
The GoCompare research paper hs also showed that these drivers are committing to excesses way outside their affordability, which is going to be a shock if a claim needs to be made. The consensus is that many drivers agree to higher excess believing that they will never have to actually pay for it, but this is a false belief given that only 35% of drivers even check their policy excess in the first place when they are arranging their insurance. This level of blase behaviour is actually putting drivers at financial risk, and it’s allowing drivers to bury their heads in the sand over what they will owe if they don’t know their own compulsory excess. Many drivers balance being able to pay their premiums comfortably, and they’d much rather have the higher excess charges. The problem there is that if they don’t know their excess in the first place, they don’t know what they’re agreeing to pay. This has resulted in a lot of surprised drivers who are making claims and being hit with huge excess bills.
62% of drivers have, as a result, had to take out credit in order to afford their excess that they have not budgeted for, which puts them into financial difficulty. Another 5% of drivers honestly cannot afford the excess fee at all, but they put it higher to make their monthly insurance premium affordable and hope they don’t need to claim. 6% of drivers – shockingly – didn’t know that they have to pay any excess at all, so don’t know to budget for it.
Drivers need to be very aware of their finances, budgeting for an excess cost in case they need to make an insurance claim. The difference in cost of excesses between insurers can be huge, and the motorists on the road need to focus on more than premiums when they are shopping for insurance cover. Admin fees that are charged by insurance providers have risen just as much as any other cost, surpassing the rate of inflation twice since 2012. Cancellation fees have risen by almost 50% over seven years, and mid-term policy changes have also increased by 38%. If drivers aren’t paying attention to these increases and budgeting accordingly, they are going to find it a shock when they finally do have to pay for a claim. The rising annual cost of premiums now mean that most policies have adjustment fees, and these are to be paid when amendments are made to a policy.