When your car insurance renewal hits, it can feel like a punch in the wallet. But what if I told you there’s a simple move that could save you up to $398 a year on your premium? Sounds great, right? The trick is adjusting your basic excess. However, it’s not as simple as it might seem, and there are a few things to consider before you make the change.
How Does Adjusting Your Excess Work?
Most people are familiar with the idea of paying an excess when they make a claim. It’s that upfront amount you pay when something goes wrong, like in a car accident or after a weather event. What many people don’t realize is that you have the power to set this amount yourself – to a point. And that’s where the savings come in. Generally, the higher your excess, the lower your premium. A quoted difference of $398 is possible by adjusting your excess from $600 to $1,000, according to research from Compare the Market.
Is a High Insurance Excess Always the Best Option?
But hold on – don’t just slam the excess lever all the way to the max. While it’s tempting to cut your premium by as much as possible, there’s a risk that comes with setting the excess too high. If your car is in a minor fender-bender, you might end up paying more out of pocket than you save. The whole point of insurance is to protect you financially, so you need to make sure that whatever excess you choose, it’s an amount you can afford to pay without hesitation if things go wrong.
What Savings Can You Expect?
Let’s break it down. If you increase your excess by just $100, you could save around $123 on your premium. If you bump it up by $400, the savings jump to $398, a nice little chunk of change, explains Yahoo Finance. But the higher you go, the more risk you take on, so it’s essential to weigh the pros and cons. It’s also worth noting that adjusting your excess isn’t the only way to lower your car insurance costs.
If you’re not driving as much these days, a low-kilometre policy might be right for you. If your policy has anyone under 25 listed as a driver, restricting the driver age can bring down the premium too. Another tip? Pay annually instead of monthly. Monthly payments can often include interest or fees that add up over time.
Shop Around for the Best Deal
Of course, even with all these tweaks, the best way to get the best deal on car insurance is to shop around. Loyalty doesn’t always pay off, and sometimes, switching to a new provider can save you more than sticking with the same insurer year after year. So, before you go tweaking your excess, make sure it’s a decision that works for your finances and doesn’t leave you paying more than necessary in the event of a claim.
Always read through the Product Disclosure Statement (PDS) and make sure the policy suits your needs before making any changes. In the end, saving on car insurance is great – but not at the cost of leaving yourself exposed to big costs when you need help the most.
