Smile, it’s excess protection!

Have you heard of excess protection? At the very least it could give you peace of mind, and at the most – major savings!

It’s a New Year – we’re all looking forward to Spring and – with a bit of luck – a more promising financial outlook for 2024! We’re all heartened by falling inflation, mortgage rates, and fuel costs. Not so heartened by our insurance premium renewals. But, while we’re all still in an uncertain January, what really makes a difference is knowing the steps you can take now with real, tangible benefits for your wallet.

That’s why our focus for 2024 is helping you make sense of your finances, sharing our top money-saving tips. And one tip that our branch teams often advise clients is to think about how to use excess protection to reduce a car insurance premium. But how could paying for excess protection actually save money? It’s all a sliding scale! Let’s take a look.

What’s happened to insurance costs?

Before we dive into excess protection, we need to get the lay of the land. Last year saw unprecedented price rises sweep the insurance industry, and for you, the consumer, that meant higher premiums. It has been reported that average car insurance premiums rocketed up by 48% in the twelve months up to June 2023. Yes, that was quadruple the level experts predicted.

Home insurance has increased as well, just at a slower rate, by 6-9% on average. However, while this is lower, it is only adding more weight to the increasing premiums woes, as most of us will insure our homes and our cars.

We are talking massive price shocks. We only really think about insurance once a year, usually when a renewal arrives – and to discover a premium has doubled, in some instances, really has caused a lot of worry in the blink of an eye. It’s not like a pint of milk, which has actually become 30% more expensive between March 2022-23 incrementally, you may notice a few pence per shop, but if you were to say buy a full year’s supply in one go, you would be in for a huge price shock. And that’s where many find themselves now with their car insurance, in particular.

You still want to find an insurance policy that offers the best value, but how do you do that in today’s market? Where do you begin? Typically, you might think of stripping your policy to its bare bones, changing from Comprehensive to Third Party, halving your mileage and so on. But that doesn’t necessarily give you the full cover you need, and in fact, it isn’t always a cheaper option. Most wouldn’t think that adding excess protection could save money in the long-term, but in the current climate, it really could.

How would excess protection reduce my premium?

One tip you may have heard recently to reduce your premium is to increase the excess. That’s where you volunteer to pay out more in the event of a claim, to have a lower annual or monthly premium cost. But this is a scary prospect, as not many of us could afford to fork out £300, £500 or more, if something did happen. And even if you could, wouldn’t it be better knowing you could get that amount refunded to you?

That’s where excess protection comes into play. You may not have heard about it before, but excess protection is an additional cover option for your insurance, that can allow you to claim back your full policy excess on one insurance claim, for the duration of your annual policy. It’s included as standard in some policies or can be added onto others for an extra fee – but if you’ve not got it already, it’s certainly worth a think as it can save you money in the long run if you did claim. Either way, it’s worth a quick call to your local branch to find out whether it’s included in your current policy, or not.

If you don’t have it included already, it may be worth thinking about if you are thinking about increasing your excess to reduce your premium. Many are often surprised that, in general, you don’t pay much more to add this onto a premium. For example, it can be as little as £38 extra for a car, but that ensures your £300 excess comes back into your wallet. And, if you’re paying monthly, that’s just over £3 more each month. Depending on circumstances, increasing your excess to £500 could have a big impact on the price of your premium, and if that’s the case, it’s a relatively low cost to protect it.

At the very least, excess protection is a small price to pay for peace of mind. But, that additional £38 could turn into a great £262 saving for you if you did have to claim!

Take a look at how excess protection could work for you:

Are you being treated like a VIP?

It’s clear that costs will remain high. That’s why we want to empower you, and shift the thinking to ‘pay more, expect more’ so that you get more for your money. We think that going the extra mile should be the default level of service for every client, especially with prices as they are today.

From the simple things, like doing the heavy lifting of sorting through all the cover options to tailor your policy to suit you, to being there in the worst-case scenario, and helping you with a claim. We always aim to go above and beyond, whether that’s arranging emergency accommodation, alternative travel solutions, or being proactive in how we help. Knowing someone is here, in your corner, makes a world of difference: even if you just need someone helpful to talk through your query.

Find your local branch, and simply give your team a ring or visit them in person. Our advisors will be delighted to help you however they can.

Sources: Insurance Times, ONS.

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