Sneaky insurers are trying to make their car and home policies seem cheaper by lowering premiums but increasing the excess.
This makes claiming on insurance cost more than you would think – because the insurer will want to the policy holder to pay any excess charges.
The excess was introduced so insurers could cut out low-value claims that clogged their administrative chains. Typically, the charge was £50 or £100.
Many policyholders stopped making low claims because the money paid out was not worth the time and hassle involved filling in forms.
Now, excess charges are a lot higher – often between £250 and £500 or more.
Most policies charge more than one excess as well – for instance car insurance might have an excess for replacing the windscreen and another for paying out for theft from the vehicle.
For anyone buying or renewing a policy, checking out the excesses is crucial – especially note when the excess is paid.
A few years ago, the excess was charged on the first claim made in any specific year. Now, 80% of policies charge an excess on each claim and many travel policies charge an excess per person claiming.
The problem for insurance buyers is their company will not point out the terms of paying the excess, so policyholders have to hunt through the small print to check out exactly what they are agreeing to when they sign up.
This makes insurance comparison difficult – which is just what the insurers want.
They like customers to buy on perceived benefits and squirrel away some of the less savoury terms and conditions in the policy schedule. It‘s not dishonest, but in many cases it’s not exactly a transparent way of conducting business.
Always ask for comparison prices for the same policy with the excess suggested by the company and a lower excess as well – for instance if they suggest a £250 excess, get a quote for a £100 excess as well.
Recent research by consumer champion Which? revealed that in many cases, the level of excess made little or no difference to the policy premium – only to the cash handed over by the policyholder to reduce the outlay of the insurance company.
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