Customers arranging car insurance through GoCompare are set to benefit from financial assistance aimed at reducing the cost of making a claim, as part of an innovative campaign to raise awareness of insurance excesses.
GoCompare Car Insurance is giving away free £250 excess cover to every customer who buys a qualifying car insurance policy. Customers who need to make a claim on their car insurance policy will be reimbursed up to £250 excess when their car insurance claim has been settled.
Research commissioned by GoCompare has revealed that excesses are among the least well-understood elements of car insurance. Excess-related terms came towards the bottom of a list of 16 common car insurance terms – ‘compulsory excess’ came in twelfth place and ‘voluntary excess’ came eleventh.
What is an excess?
An excess is the amount you’ll have to pay upfront towards a claim you make on your insurance. There are two main types – compulsory and voluntary, which combined make up the ‘total excess’. The compulsory excess is set by the insurer and will vary depending on several factors including the age and experience of the driver and the type of car insured.
The voluntary excess is chosen by the policyholder. To reduce the cost of their premium, some drivers agree to make a larger contribution (voluntary excess) if they need to claim. However, in the event of a claim, this voluntary excess is added to the insurer’s compulsory excess – meaning these drivers will pay a higher amount towards the cost of a claim.
The amount of the excess will depend on the nature of the claim, for example, whether it is for fire, theft or accidental damage. Insurers will only process claims once the excess has been paid, whether the policyholder is at fault or not.
Millions of motorists are caught out by excesses
Just over a third of the drivers (35%) surveyed said they bother to check the policy excess level when arranging insurance for their car.
The research also revealed that:
- Only 46% of drivers who have recently made a claim expected to pay an excess.
- One in ten hadn’t appreciated just how much they had agreed to contribute.
- While a significant minority (6%) hadn’t realised that they would have to pay anything towards the cost of their claim.
The survey also looked at what, if any, arrangements drivers had in place if they were unfortunate enough to have to claim on their insurance:
- Only 30% of drivers would be able to afford to pay the excess out of income.
- 22% said they would use a credit card.
- A third would have to raid their savings.
Lee Griffin, CEO and founder of GoCompare, said, “Since we launched in 2006, our focus has always been on helping people compare cover as well as saving them money on their insurance. This new initiative will mean we are also there for our customers when it matters most – when they need to make a claim and end up out of pocket because of their excess.
“Policy excesses are a grey area for many people and, as a result, they can provide a nasty shock during a claim – a time when there is already enough stress. Our research has revealed that excesses could contribute to genuine financial hardship, with 37% of drivers admitting that they don’t have the means to pay their excess or would have to turn to credit cards or loans.
“Whether you’re arranging insurance for the first time or renewing cover, it’s important to consider the total cost of the policy. This means looking at the amount you pay upfront by way of the policy premium, and the cost of the excess payable if you’re unfortunate enough to need to make a claim.
Using a comparison site like GoCompare allows you to clearly see the excesses you will pay, and you can edit the quote to see how different voluntary excess levels could impact the premium. If you are considering opting for a higher voluntary excess to save money on your premium, make sure you’re comfortable with paying more should you need to claim, and know that you will make it more difficult for yourself to claim in the first place, as the value of your claim will need to be more than your total excess.”
For more information about excesses – what they are and how they work – read GoCompare’s new guide, here: https://www.gocompare.com/car-insurance/guide/excess-explained/