AXA has warned drivers against pushing up levels of excess in order to reduce premiums as growing numbers struggle to meet payments.
The UK insurer has reported a increasing number of customers unable to authorise repairs to their damaged cars due to lack of cash to pay for the excess.
This increase has happened gradually over the last few years, but in 2011, the number climbed by 61 per cent leaving people with potentially unroadworthy cars or at the very least with damage that will deteriorate due to lack of repair.
Research from the company shows that 29 per cent of motorists do not have enough readily available savings to cover their excess if required. In fact nearly half the population (48 per cent) has readily available savings of less than £500 and a third have less than £200.
Despite this, 62 per cent of motorists are aware that at least part of their excess is a 'voluntary' amount, in many cases pushing the sum they need to pay to an unaffordable level. And this number is increasing - average voluntary excesses at AXA have risen 10 per cent in two years.
More worryingly, a further 17 per cent of motorists are unaware of what type of excess they have.
As well as those simply not making a claim because they can't foot the excess bill, AXA has recently seen an increasing number of customers "wishing to wait" to establish liability (i.e. see whether they can claim the money for the excess back from a third party) before making a claim.
While this is legal for up to 30 days under the terms of the policy, it can increase the value of the claim as damage can deteriorate quickly if not attended to.
What can you do as a consumer?When buying your car insurance policy it's important to check how much the excess will be. Whilst having a higher excess will cut the cost of your premiums, AXA say that one in ten will have an accident each year, meaning there's quite a high likelihood of needing to pay the excess.
Sarah Vaughan from AXA says: "As an industry we need to make sure motorists understand the level of excess they are committing themselves to when they buy their insurance and then to ensure it is at a sensible level for them.
"We appreciate that premiums have risen a lot in the last couple of years and we can understand consumers looking at ways of saving a bit of money. But if this means that they can't afford their excess, it is a completely false economy.
"Even if the money can eventually be recovered from a third party, motorists should be careful to have the cash available in order to get their repairs done swiftly and get their cars back on the road."