An excess on your insurance policy is the amount you’re required to pay towards each claim you make. Simple, right? It’s not uncommon however for there to be confusion among customers surrounding the excess of insurance policies, when they are required to pay up and why.
This is demonstrated in the endless forums online with people looking for advice following an accident. There are many instances where customers feel misled by their insurance provider after they’ve been involved in an accident when they weren’t clear what their policy terms were.
A trap customers occasionally fall into is only looking at the monthly payments when deciding on a policy to take out – this can lead customers into a false sense of security or feeling unsure of what they are paying for. Generally speaking, customers are only liable to pay the excess if a claim is made on their vehicle; however in recent times, some insurance providers have been changing their policies to include third party excess. Why? Perhaps to be able to offer the lower monthly rates customers look for, to win business in a very competitive market, or even to appear to be value for money.
An example of this was found on one of industry publication Insurance Age’s forums shows a
customer who took out a motor insurance policy with a £3,000 excess, based on the premise
that the monthly payments were very affordable and allowed him to maintain his lifestyle. The
customer then had a minor accident, where the only damage to the car was a broken number plate.
It later became apparent that the other car had been written off, leaving the customer with 14 days to pay the £3,000 excess bill (with immediate interest) which he couldn’t afford. The reason this happened was again due to the customer not reading the terms then basing their decision solely on the monthly payments. The lesson to be learnt from this therefore is, if it seems like there should be a catch, there normally is one.
Local insurance broker Jane Sutton from Coversure Wisbech warns about reliance on the internet for purchasing cheap car insurance. “Customers need to be careful when buying insurance and make sure they fully understand the conditions imposed upon the policyholder - this is difficult if they choose to buy insurance online. By dealing with a local insurance broker, conditions like this are fully explained to the customer and appropriate cover found and a price that is affordable, but without the nasty surprises should a customer need to make a claim,” she said.