Hidden cost of insurance: Research reveals drivers hit by above inflation rise in policy excesses

New research from GoCompare has revealed that since 2012, the average cost of compulsory car insurance excesses has risen well above the rate of inflation.  Depending on their policy, drivers can now face compulsory excesses for a fire, theft or accidental damage claim of up to £3,000, compared with a maximum of £475 in 2012.        

Average excesses for accidental damage claims have risen by 26% from £132 in 2012 compared with £166 today.  Average theft excesses have increased by 25%, while the average cost of excesses for fire-related claims has risen by 24%. 

The analysis also highlighted a massive increase in the range of compulsory excesses over the last seven years, which have expanded substantially from £50 to £475 in 2012 to £50 to £3,000 in 2019.

The historical analysis of policies also revealed a rise in the compulsory excess for inexperienced drivers (motorists aged 25 or over who have not held a full driving license for at least a year).  Excesses for these drivers rose on average from £176 to £199, an increase of 13%.  

Young drivers are typically viewed as a higher risk to insurers and are subject to the highest compulsory excesses due to their age and inexperience making them more likely to claim. 

However, the excesses for these drivers saw the smallest increases.  Today, excesses for under 21s are on average £348, compared with £332 in 2012 (a 5% increase).  For 21 to 24-year-olds the average excess is 4% higher at £224 from £216 in 2012.  

With car insurance premiums hitting an all-time high at the start of this year, many drivers have looked to reduce their premiums by agreeing to pay an additional voluntary excess.  However, research by GoCompare has revealed low levels of understanding about policy excesses, leading the comparison site to warn that many motorists are potentially committing to higher excesses than they can afford – leaving them with a nasty shock if they need to make a claim.

The research showed that only 35% of drivers check policy excess levels when arranging insurance, with the price being a higher consideration.  As a consequence, fewer than half (46%) knew the amount of their compulsory excess.

For many drivers who’d recently made a claim on their insurance, the cost of covering the policy excess had come as a nasty surprise:

• 13% said the excess was more than they thought;
• 62% admitted they would have to raid savings or turn to credit to pay their excess, in the event of a claim;
• 6% didn’t know they had to pay an excess;
• 5% said they couldn’t afford to pay it;

As part of an innovative campaign to raise awareness of insurance excesses, customers arranging car insurance through GoCompare can benefit from financial assistance aimed at reducing the cost of making a claim.  GoCompare is giving away free £250 excess cover to every customer who buys a car insurance policy.  Qualifying customers who need to claim on their car insurance policy will be able to claim back up to £250 towards their excess. 

Lee Griffin, CEO, and founder of GoCompare explained “Policy excesses are a hidden cost for drivers and they have gone up significantly in recent years. There’s also a massive difference in the cost of excesses between insurers.  So, when arranging cover, it is essential you compare excess levels rather than just focusing on premiums.  And in case the worst happens, check you can afford the excess you’re committing to.

“Some drivers agree to pay a higher amount towards the cost of a claim in return for a lower premium.  However, if these drivers make a claim, their voluntary excess is added to the insurer’s compulsory excess – which can add up to a considerable sum.

“Using a comparison site like GoCompare enables you to clearly see the excesses you will pay and edit quotes to see how different voluntary excess levels could impact the premium – helping you get the cover you need at the right price. 

“Customers arranging their car insurance with us will now get extra peace of mind knowing they can use our free £250 excess offer, helping to stop them being left out of pocket.”

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/

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For further information please contact:

Anders Nilsson or Louisa Marsden at GoCompare on 01633 654 054 / 01633 655 132

Gordon, Jason or Liz at MAW Communications on 01603 505 845

Keep up-to-date with GoCompare on Twitter; @GoCompare

Notes to editors

¹On 15 July 2019, Bilendi conducted an online survey among 2,000 randomly selected British adults who are Maximiles UK panellists.  The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.

²Defaqto Matrix of 232 comprehensive motor insurance policies (05 July 2012) and 355 comprehensive motor insurance policies (03 July 2019) - instant and unbiased market and competitor intelligence, from independent financial researcher Defaqto. Percentages are rounded up to the nearest whole number. Average fees are based on policies which charge a fee. 

Averages are calculated on those policies which state a monetary figure.

³Rate of inflation 2012 to 2017 is 17.1% based on Consumer Prices Index www.officialdata.org

⁴The offer applies to fully comprehensive policies and is open to anyone who buys a valid car insurance policy from GoCompare during the offer period.  The policyholder must be 17 years of age or older and a permanent UK resident. The customer will qualify for the free excess protection cover for the duration of their car insurance policy (12 months max).  Excess Protection Insurance is provided by a separate policy, underwritten by AXA Assistance (UK) Ltd.

GoCompare

GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.

GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.

GoCompare does not sell its customers’ data.

When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.

GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).

For more information visit www.gocompare.com and www.gocomparegroup.com