British drivers have a massive gap in their knowledge when it comes to understanding motor insurance excesses and it could have an impact on their finances, according to new data.
Research suggests that just 39 per cent of survey respondents fully understand the meaning of “compulsory excess” and “voluntary excess” when it comes to their car insurance policies.
Experts have warned that because drivers do not understand their car insurance excesses, they may not be properly prepared for the process of submitting a claim.
The issue becomes even more prevalent with the younger generations, with just 13 per cent of motorists between the ages of 16 and 24 fully understanding the definition of compulsory and voluntary excess.
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Drivers could be in for a surprise if they cannot afford to make a car insurance claim
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Drivers on the opposite end of the spectrum are more confident in their abilities. In total, 57 per cent of those over the age of 55 knew what the two excesses were.
Compulsory excess is determined by the insurer and cannot be altered, whereas voluntary excess is chosen by the policyholder. Both excesses are the amount someone has to pay when making an insurance claim.
Experts from Go.Compare Car Insurance state that opting for a higher voluntary excess may result in a lower premium. However, drivers and homeowners must ensure that they are able to pay if they need to make a claim.
Tom Banks, spokesperson at the company, said: “Excess clearly remains a misunderstood aspect of insurance – and as it can have a considerable financial impact in the event of a claim, this is worrying.
“While no one wants to spend more time or money when buying a policy, it’s important to make sure that you understand the terms and details of your policy
“It can be tempting to opt for an insurance policy with a higher compulsory or voluntary excess in the hope that it will bring down the cost of your premiums, but it’s vital to ensure that you can afford to pay the excess you are committing to.”
An even greater proportion of drivers (71 per cent) admitted that they didn’t fully understand what “policy exclusion” meant.
This happens when an insurance company will not cover the driver for certain acts. This can include intentional acts, reckless driving and vehicle modifications.
Banks called on drivers to always educate themselves on policies which they may not be familiar with before buying cover for their vehicle or home.
He added: “We recommend using a price comparison website to compare policies side by side, as this will help make sure you find the right level of cover, with excesses that you can afford to pay for should you have to make a claim.”
Go.Compare is offering drivers who purchase through their service £250 in free excess cover, as well as up to £250 refunded after a claim is settled.
The latest data shows how the average third party, fire and theft cover costs £436 a year. This is just £1 cheaper than fully comprehensive cover.
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Experts are calling on motorists to be fully educated about their car insurance policy
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The average cost of third party only insurance, which is usually the most basic, costs £591. This is a staggering 35 per cent difference compared to third party, fire and theft.
Younger drivers lose out again with average car insurance prices for those between 17 and 24 setting motorists back a staggering £957.
