Car Insurance and Excess Payments - Whats the Story?
If you increase the excess payment on your car insurance you'll save a lot on your premium. This article explains.
An excess payment is the fixed contribution you must pay each time your car is repaired through your car insurance policy. Normally the payment is made directly to the accident repair garage when you collect the car.
If your car is declared to be a write off, your insurance company will deduct the excess agreed on the policy from the settlement payment it makes to you.
If the accident was the other drivers fault, and this is accepted by the third party's insurer, you'll be able to reclaim your excess payment from the other person's insurance company. But what if the other driver is uninsured?
Legal Requirements for Car Insurance
All motorists know that it's a legal requirement (under Section 143 of the 1988 Road Traffic Act) to have insurance for any damage they cause to third parties. But still many drive without insurance. An estimate of the incidence of uninsured driving in the UK is hard to come by and, for the obvious reasons, those drivers involved in breaking the law have every reason to keep quiet about it.
Calculations from the Department of Transport suggest that in the UK around 5% of vehicles are being driven without valid car insurance. This group of people not only impose costs on honest motorists in the form of higher premiums, but their presence on our roads also represents a serious risk to other road users. Consequently, uninsured driving is increasingly being regarded as a major social problem.
But driving without car insurance is not a victimless crime. If you have an accident with an uninsured driver and the accident wasn't your fault, the repair costs will be paid for by the Motor Insurers' Bureau that's funded in its entirety by the industry, or by your insurer. Therefore, if you're involved in an accident caused by an uninsured driver you'll eventually get you car repaired but you'll still have to pay the excess and there'll be no one to reclaim your excess payments from.
What is a Compulsory Excess?
A compulsory excess is the minimum excess payment your insurer will accept on your car insurance policy. Minimum excesses do vary according to your personal details and driving record and by insurance company.Today the average excess is around £100, but younger drivers could be faced with excesses of up to £500 - whilst more mature, experienced driver ith a good driving record, could be offered an excess of just £50.
So what is a Voluntary Excess?
In order to reduce your insurance premium, you may offer to pay a higher excess than the compulsory excess demanded by your insurance company. Your voluntary excess is the extra amount over and above the compulsory excess that you agree to pay in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by your insurer, your insurer I able to offer you a significantly lower premium.
The garage has repaired my car but it won't release the car too me ntil I pay the policy excess to them. Is this right? Yes, that is normal practice. But make sure you inspect the car when you collect it. Satisfy yourself that the repair is perfect. Then make sure you keep their receipt for your excess payment as you will need this if you're reclaiming against a third party's car insurance. And just in case there's a dispute, it's a good idea to make sure the repair garage gives you a repair schedule. This will list all the repairs that were made to you car.
Brokers Online aim to educate their clients by providing them withuptodate financial articles written by their finance editor Michael
If you found this page useful please click the +1 button below to tell Google that its a great page!
Please share this page with others, and leave a comment, we value all feedback!
Was this page useful? Do you have something to add? Do you disagree?
If your comments meet our guidelines then we will publish them (you do not need to register!)
Ttradesman - click here to join our network to receive leads from customers in your area
"I looked at the same issues with excess contributions. I reduced my policy premium saving £198 by increasing excess to £550. I was made aware of an insurance policy that pays my excess if I had an accident. The cost with a voucher freeby XSP100 £52.00 . I now have a comp policy that i can afford and a policy that covers my £550 XS winner! "