Image via flickr user Dan4th Nicholas

Everyone knows the old saying about excess – too much of anything is a BAD thing. But not everyone knows that trying to save too much money on your car insurance policy’s “excess” is a risky move that can cost you thousands of dollars if you’re not careful.

What Is This “Excess” You Speak Of?

In case your insurance agent skipped the “excess” portion of your car insurance policy or you chose a higher excess when purchasing your policy online because you thought “more” was better – excess is the amount of money YOU must pay your insurer before it will cover the full amount of your claim.

Why Doesn’t Everyone Have a Low Excess Then?

The problem with having a low excess is that it’s expensive. That’s because most of the financial risk is on your insurer if you ever make a claim. But you shouldn’t worry too much about your insurer shouldering most of the cost in case you get into an accident – they’re getting plenty of money from you in the form of higher monthly premiums.

Cheaper Isn’t Always Better – It Can Cost You In the Long Run

What’s wrong with raising your excess to the highest possible limit to save money? Nothing – if you’re someone who drives an off-peak car, lives fairly close to work, drives irregularly, and has the unique ability to see into the future.

• Drivers under 26: Sorry kid, statistically, you’re more likely to be involved in an accident than someone just a few years older than you.
• Drivers over 60: Sorry uncle, with all due respect, you’re more likely to have poor eyesight, health problems that affect your limb movement, and slower reaction time – factors that contribute to many accidents involving older drivers.
• Rush Hour Commuters: Bumper-to-bumper /stop-and-go city traffic poses a higher risk for accidents, where even a slow speed accident can cause 1K-2K worth of damage!
• Drivers Who Commute 50km+ daily:  Your likelihood of an accident increases with both driving frequency and distance. 
• Shift Workers: Fatigue is a big contributing factor to accidents, as people who come off 12-hour shifts tend to be more fatigued than those of us working 8/9 hours daily. 

by Jeff Cuellar

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