Insurance Excesses Rise Sharply

Claiming on insurance is becoming more costly thanks to recent rises in the excess you pay when making a claim. So how can you save money on common policies like home, travel or car insurance?

In the past, when you made a claim on your insurance, you would have typically paid a one-off excess of £50. Not any more says financial research firm Defaqto.

More than half of all UK home insurers now attach an excess of £100 or more to their policies, compared to a third who did so three years ago. Travel and car insurers are now following suit.

But higher figures aren’t the only worry for consumers. Around 80% of travel insurance policies now apply an individual excess for each section of the insurance policy you claim under – and with some policies this will apply per person.

This means individual excesses for medical claims, personal belongings, personal liability and more – potentially adding up to hundreds of pounds. And if you lose your luggage on holiday, you could end up paying an excess for each member of your family.

A spokesperson from Defaqto commented added, “Most people don’t realise how complex excesses are. There isn’t just one per policy. The amount you pay would depend on exactly what you are claiming for.”

Why have insurance excesses gone up?

More of us are shopping for cheaper insurance online, using price comparison websites to find better deals. Insurance companies know this and may have lowered their premiums to rank higher on these sites – but they have raised excesses at the same time in order to make these cheaper policies profitable.

This was acknowledged by the Association of British Insurers which said, “Higher excesses are a way of keeping prices lower than they otherwise would have been – particularly in areas like motor insurance where we know there have been large increases.”

Moneyhighstreet comments: “When you buy or renew an insurance policy, don’t look just at the amount you’ll be paying in monthly premiums.

“Take the time to read the fine print and find out what your excesses are likely to be. Cheaper policies often have more rigid terms and are likely to charge higher or multiple excesses.

“Most importantly, check that the policy you take out has the cover you need – whatever kind of insurance you’re buying. Not having adequate insurance can result in major unforeseen expenses.”