Car insurance excess: savings may not justify cost

Increasing the voluntary excess on a car insurance policy doesn`t necessarily lead to equivalent savings on the cost of the premium, according to research by moneysupermarket.com.

The comparison site compared a number of existing car insurance deals and found that there is only a £59 difference between the average cost of a premium with a £100 excess (£382) and one with a £500 excess (£323).

Similarly, there is a saving of just £5 to be had when increasing the excess from £250 to £300.

But the research did reveal that motorists with no voluntary excess pay an average annual premium of £495, which does make a £100 excess cost-effective.

A car insurance expert at Think Money commented: "Deciding on the voluntary excess on an insurance premium can be tricky. On the one hand, increasing the premium does bring the annual cost down, but on the other hand, a high excess will make claiming on your insurance less worthwhile from a financial perspective.

"For a particularly safe driver, it may be worth choosing a higher excess and paying less for the premium. But this is essentially taking a bet on the assumption you won`t have an accident, and things don`t always work out so well.

"We`d advise people to choose a voluntary excess that they can comfortably afford, just in case the worst does happen."

Tags: car insurance, insurance, excess, voluntary excess, cheaper, Money Supermarket

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