Research by GoCompare car insurance revealed there’s still a lack of understanding about motor insurance and excesses.
Just over 2000 people took part in the survey which found that just 28% of motorists check their excess levels when taking out a policy: 36% of motorists said they just go for the cheapest price when they’re buying a policy, and when it came to younger drivers – those aged 18-34 – only 9% said they check the excess levels of their car insurance.
Those surveyed were also asked about their understanding of car insurance terms – from legal assistance to driving other cars – and 47% claimed they fully understood voluntary and compulsory excesses, but this dropped to 18% for those aged between 18-34.
Excess amounts are included in car, home and most other kinds of insurance policies and is the amount a policy holder is required to pay out themselves before further costs can be claimed from the insurer.
GoCompare’s car insurance spokesperson, Ryan Fulthorpe, said, “The research shows that excesses, along with other various insurance terms, are still one of the most misunderstood areas of insurance.
“With 36% of people not even being aware of the amount their current insurance excesses are, it’s no surprise that more than one in ten people (13%) who had to make a claim, said the excess was more than they expected.”
He added, “No one wants to spend more time or money than they have to when they’re buying insurance but it’s worth taking a bit of time over the details when you’re shopping around to make sure you understand what you’re purchasing.
“Knowing the excess you will need to pay if you need to make a claim is really important as excess amounts can vary significantly. If you think you’re only paying £150 but then the excess bill comes in at £500 – how could you afford that? Our survey found that 8% of those who had to make a claim, couldn’t really afford to pay the excess, and so these are the things people should be thinking about when they take out a policy.”
The compulsory excess is set out by the insurer and cannot be changed, but a voluntary excess is an amount chosen by the policyholder, often in exchange for a lower monthly premium, and is payable on top of the compulsory excess.
In addition, if someone then needs to make a claim on their insurance policy, the value of that claim must exceed the total excess. For example, if the voluntary excess and compulsory excess are both £250, the total excess is then £500. But if the value of repairs was less than the £500, a customer would not be able to claim.
Currently, drivers shopping around for car insurance with GoCompare can benefit from its free £250 excess cover. And in January this year, it also launched a similar deal for home insurance where it will pay-out up to £250 for qualifying home insurance claims.