The Fixer: car insurance excess

Have you been left out of pocket due to poor service or sharp practice? Do you have a money problem that won't go away?

It can seem impossible to get a fair result when you are battling a financial issue alone. But never fear! The AOL Money Fixer is here to help.

Dear Fixer,
My car insurance is coming up for renewal next month and I have been shopping around a bit looking for the best deal.

Even though I have never had an accident, the quotes I am getting back seem very high, mainly because I am only 24.

As money is a bit tight at the moment, I am tempted to agree to a higher excess payment to reduce the amount I have to pay out for insurance. Is this a good way to keep insurance costs down?

D Gilbert, Brighton

Dear Mr Gilbert,

All motor insurance policies come with an excess, which is the amount you have to pay towards any claims.

It comes in two parts: compulsory and voluntary. And you can choose how much you pay as a voluntary excess on top of the compulsory excess set by the insurer.

As you have realised, choosing a higher excess level can result in lower premiums. That's because the more you agree to pay towards any claims, the less you are likely to cost the insurer concerned.

But beware: while a high excess can save you money on your premiums, it will also make it pointless claiming for even fairly major work.

If you do have an accident, for example, you may therefore find yourself forced off the road because you cannot afford to have your car repaired.

Rather than setting your excess at a very high level, I would therefore recommend looking into telematics policies with which your car is fitted with a "black box" and your premiums are based on how well you drive.

The Fixer

Whatever your financial problem, write to themoneyfixer@aim.com and The AOL Money Fixer will get on the case.

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