Simple trick that should cut your car insurance could be PUSHING UP your bills
Lots of us offer to pay voluntary excess thinking it will make car insurance cheaper, but new research shows it could actually push premiums up
CHOOSING to pay voluntary excess could push up your car insurance costs by hundreds of pounds a year, according to new research.
When drivers apply for car insurance they can opt to pay a higher voluntary excess in order to reduce their premiums.
The voluntary excess is only paid if they have an accident, so often drivers take a gamble on this to reduce their monthly bills.
Insurers also set their own “compulsory” excess which must be paid every time a driver has an accident and is non-negotiable.
But an investigation, , found that drivers can end up paying the same or more if they try using this trick.
It compared comprehensive insurance premiums using a price comparison website for a 30-year-old and 50-year-old Ford Focus driver living in Aberystwyth, Leeds and south London.
It ran quotes based on paying a voluntary excess of £0, £250 or £500.
In two of the examples from Moneywise the cost of the total premium went up if you increased the excess.
Their research also shows inconsistencies in the theory because in one of the cases the quote went down and then up again, if the excess was increased.
Drivers who increase their voluntary excess and had an accident would have to pay much more to get their cars fixed.
For example, a 30 year old living in Aberystwyth who upped their voluntary excess from £0 to £500 would see premiums rise by £37 a year.
And in return they’d have to pay out £580 rather than £466 every time they crashed.
So despite paying nearly £40 more in premiums, they’d be shelling out an extra £385 every time they had an accident.
What is voluntary excess?
WHEN you take out car insurance there are a number of factors to consider.
- The first is the premium, which is the annual cost of your insurance cover.
- The second is the insurer’s compulsory excess, which is the amount you’ll have to pay out if you make a claim.
- Third is the voluntary excess. This allows you to offer to pay more when you have an accident (increasing your total excess) in the hopes of getting lower premiums.
Hastings told Moneywise: “In most cases, selecting a higher voluntary excess will lower the insurance premium.
“However, the effect the voluntary excess has on the insurance premium can vary based on the information provided during the quote process about the driver and vehicle.”
Deborah Vickers, channel director at said: “Excess on car insurance is confusing. There is voluntary and compulsory excess, so it won’t necessarily mean a saving if you increase the voluntary excess.
“A lot of the savings depends on you as a driver and the vehicle. All price comparison sites have filters so you can see the saving by changing the voluntary amount.”
So, should you avoid increasing your voluntary excess?
Voluntary excess can sometimes lower your premiums, if you opt for the right deal.
But it’s only going to lead to savings if you don’t need to make a claim – otherwise you’ll end up paying more.
Vickers explained: “Increasing your excess could mean a nasty shock if you have to make a claim on your insurance.
“The overall expense could eat into any savings you made by choosing a higher voluntary excess.”
If you’re willing to take the risk, make sure you check you’ll actually be able to afford the premiums if the worst should happen – after all, there’s no point in agreeing to pay £900 in total excess if that’s out of your price range.
Steve Pritchard – Founder of said: “If you do want to set a higher voluntary excess to save money on your premiums, be careful that you don’t set it so high that you will be left without the cash you need in an emergency.”
Finally, be wary of making your excess payments so high that they’re likely to cost more than repairs to the car.
You can take your car to the garage and pay out of your own pocket to avoid the inflated excess charge, but you will probably need to inform your insurers.
How to cut the cost of your car insurance
THERE are lots of ways to bring premiums down without resorting to extortionate voluntary excess payments.
We spoke to Matt Oliver from Car Insurance to find some of the best ways to save:
1. Save £88 – by using the right job title
Your occupation is one of the major pieces of information that insurers use to work out your insurance premium. Ultimately, some jobs are viewed as more “risky” than others. For instance, if you’re a professional footballer, you’re likely to shell out more for your cover than a priest.
But sometimes there’s more than one job title on the pre-defined list that accurately describes what you do. Picking the right one could lead to significant savings.
For example, someone who selects “chef” could pay as much as £88* more than someone who selects “kitchen staff”.
Other jobs that tend to have a lot of similar options include office work, building and construction, teaching and journalism.
Don’t lie about your job though – you’ll invalidate your cover.
If you’re a full-time parent, retired or a full-time student make absolutely sure you’re selecting those titles and not ‘unemployed’ – it could save you almost £300*.
*Based on a 31 year old male, living in Reading, driving a Vauxhall Corsa
2. Save £520 – by adding a more experienced driver to your policy
Inexperienced and young drivers typically face the highest premiums – but could save up to £520* by adding more experienced drivers to their policy.
While new or younger drivers are likely to see the biggest savings, this applies to everyone, even if you’re seen as a low risk driver yourself.
Make sure you’re not illegally ‘, which is where younger or less experienced drivers claim to be the ‘named’ – additional driver, when they’re actually the sole or main user of the vehicle.
*Based on an 18 year old, living in North London, driving a Vauxhall Corsa
3. Save £76 – by planning ahead if you buy in advance
While people rarely look forward to buying insurance, getting it done as early as possible could save you more than you might think.
On average, Go Compare found car insurance is £76 cheaper if bought a week before its start date.
4. Save £120 – by paying annually
Paying monthly is convenient and affordable but it’s almost always more expensive than paying for your insurance in one lump sum. Paying annually could save you around £120*.
*Based on a 31 year old, living in Newport, driving a Vauxhall Corsa, paying monthly compared to paying annually.
5. Save £280 – when you shop around
The only way to make sure you’re securing the best deal on your car insurance is to shop around – and the good news is, it only take a few minutes.
Consumer Intelligence research found that 51% of customers could save up to £279.42 with GoCompare Car Insurance.
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