Why a bigger excess won't reduce your insurance bill

Updated: 
There are some things we have always taken as read when it comes to car insurance: you're going to break the bank when you insure your teenage son, your insurer isn't going to like it if you leave your car in a crime-infested part of a city, and if you want to bring your premiums down, you simply hike up the excess you'll have to pay on every claim.

But at least one of these ever-present truths no longer stands.
Excess no cheaper
Research by Which? Money, compared several car insurance premiums and found that upping the excess can sometimes make car insurance more expensive.

This flies in the face of logic, as if you cover the first £200 of any claim instead of £100, then surely your insurer is picking up less of the tab, but in the weird world of insurance this doesn't help your position. The Which? research obtained quotes which differed only on the level of excess, and found in most cases it made little difference and in some cases it pushed the price up. In one instance, increasing the excess from £350 to £550 with Aviva increased the premium price by 8%.
Peter Vicary-Smith, chief executive of the consumer body, said: "Common sense would suggest that if you increase your excess, you'd pay less for your policy, but we were surprised to find that some policies actually ended up costing more. We regularly find that some of the big name insurers are found wanting when it comes to offering people good customer service but now it seems they're also falling short on value for money."

Why you don't save
The insurers point out that it depends on the other risks you pose, and whether they fundamentally consider you a good risk or not. If they aren't keen to win your business you'll be quoted a high premium, and bumping up the excess isn't going to help you much.

Aviva defended this particular instance by explaining that its fraud detection systems spotted that this wasn't a real person, and the quotes reflected that.

It is therefore worth dropping your assumptions when you're hunting for car insurance. Visit a comparison site to check the quotes, but try out variations such as the level of excess, to check whether or not it improves your premium.

Of course, if you're still parking your 18 year-old son's BMW in a sink estate overnight, you're still going to have to brace yourself for some budget-bustingly expensive quotes.

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