Insurance - the excess v's policy price conundrum

[LaurasOtherHalf]

I'm guessing there's a simple answer to this one but here goes....

Comparing the market for next years insurance I was astounded by some of the excesses on the cheapest policy:

Policy price £305
Excess £700

Policy price £382
Excess £500

Policy price £557
Excess £150


Now, I've never had insurance with more than £250 excess but is this a new thing? I suppose I probably wouldn't consider claiming off the insurance for anything below £500 anyway do do folk just go for the cheapest?

I have "return to invoice" insurance by the way if that makes any difference, though I guess I'd have to check the small print as I suspect it won't cover loss through excess.

[scorcher]

I personally don't like high excesses. Not much point in having insurance if you've got to pay half the claim yourself.

[LoonR1]

Higher excess equals cheaper headline price which is all price comparison sites rate on. You can usually reduce the excess on the insurers website but you're a virtually captive audience then.

The way to look at it is to pretend you had to claim today and work out why you could afford to pay for yourself. You seem to have settled on £500 so ensure that is the max excess.

[TwigtheWonderkid]

LoonR1 said:

Higher excess equals cheaper headline price which is all price comparison sites rate on. You can usually reduce the excess on the insurers website but you're a virtually captive audience then.

The way to look at it is to pretend you had to claim today and work out why you could afford to pay for yourself. You seem to have settled on £500 so ensure that is the max excess.

It's not quite that simple though.

In reality, if you have a £500 x/s and you have £600 worth of damage, you're not going to claim as it's not worth losing your bonus for £100. So you normally end up paying your own claims up to about £250 over the x/s. So, if you choose a £500 x/s, the question to ask is can you afford £750 to fix your own damage in the event of a £750 claim.

Of course if you have a larger own damage claim, then LoonR1 is right, it will only cost you £500, because insurers will pay the rest.

[jamei303]

scorcher said:

I personally don't like high excesses. Not much point in having insurance if you've got to pay half the claim yourself.

Hart's insurers in the Selby rail crash, where he fell asleep at the wheel of his Land Rover and plopped it onto the East Coast Main Line paid out £22,000,000.

If claims were never more than the value of the car then premiums would be pocket money.

[LoonR1]

Not everyone can afford a £4k hit though. There is some logic in what you're saying but not for all. Ironically the need for a lower excess an higher premium increases the less people earn.

[LaurasOtherHalf]

TwigtheWonderkid said:

LoonR1 said:

Higher excess equals cheaper headline price which is all price comparison sites rate on. You can usually reduce the excess on the insurers website but you're a virtually captive audience then.

The way to look at it is to pretend you had to claim today and work out why you could afford to pay for yourself. You seem to have settled on £500 so ensure that is the max excess.

It's not quite that simple though.

In reality, if you have a £500 x/s and you have £600 worth of damage, you're not going to claim as it's not worth losing your bonus for £100. So you normally end up paying your own claims up to about £250 over the x/s. So, if you choose a £500 x/s, the question to ask is can you afford £750 to fix your own damage in the event of a £750 claim.

Of course if you have a larger own damage claim, then LoonR1 is right, it will only cost you £500, because insurers will pay the rest.

This, is a very good point.

[TwigtheWonderkid]

anonymous said:

[redacted]

If you haven't done the analysis then you are guessing. Many insurers put on a loading for a fault claim. But if you have protected, then your premium will go up due to the loading, but your NCB stays at 60 or 65%. If you don't have protected, you still get the loading, and your bonus reduced to 50 or 40%. So protected bonus will save you money in the event of a fault claim.

Unless you are saying that if you have protected bonus, insurers put on a bigger accident loading to compensate for their loss. I've never seen any evidence for that, and I think they would have been rumbled by now, by office of fair trading etc. I have protected bonus but I've never had a fault claim so I can't say for sure.