Are expectations about voluntary excess a little excessive?


Car insurers are accused of ripping off customers who offer to pay a higher excess in a bid to find cheap insurance.

A survey by consumer group Which? found that opting for a higher excess changed the cost of cover quoted by an average of less than 1%.

Many buyers looking for cheap car or home insurance believe increasing the excess means they would pay less.

But the survey shows insurance companies don’t bother to adjust the premium to account of switching some of the risk from them to the costumer.

£250 excess only saved a driver £7 on car cover

Even if insurers companies discounted premiums if an excess was increased, the savings were less than £7 even when the excess was increased by £250.

Until now, insurance experts have suggested that opting to pay more cuts the cost of insurance.

An excess is the amount a customer agrees to pay towards a claim. The theory was if a customer opted to pay more towards a claim, the insurance company carried less risk, so would reduce the cost.

A by-product of the Which? survey is a look in to anti-fraud measures included in online quote engines for insurance.

In one case Which? found insurance giant Aviva actually increased the price by £34 for a customer who opted for a higher excess to cuts costs.

Aviva suggested that the software is programmed to detect fraudsters trying to ‘massage’ quotes and automatically builds in the increased price.

Cheap car cover that is not value for money

Peter Vicary-Smith, chief executive of Which? said: “Common sense would suggest that if you increase your excess, you’d pay less for your policy, but we were surprised to find that some policies actually ended up costing more.

 “We regularly find that some of the big name insurers are found wanting when it comes to offering people good customer service but now it seems they’re also falling short on value for money.”

The Insurance Blogger  concludes that drivers should ask for a quote with and without an increased excess to better compare the price – and if the saving does not add up to a considerably reduced premium, let the insurer carry the risk and keep the excess amount in the bank.

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