Voluntary excess - does it make good financial sense?

Question

My car insurance is up for renewal and I'm unsure whether to apply some voluntary excess to the policy to reduce the premium. As I'm 22, there is a compulsory excess of £150 already. I also have 3 years no claims and my car value is estimated at £3000.

I was trying to assess whether I would make a claim on something which cost £150, considering I would lose my 3 years no claims and increase my premium.

Increasing my voluntary excess from £0 to £100 would reduce my premium by £25.

I'm basically looking for some financial advice really. Is voluntary excess worth taking in this situation? If so, how much would be recommended?

Thanks in advance ;o)

Answer 1

Yeah, max out your excess (here in the states we call it a deductible) and use the money to max out the top end of your coverage.  It's much cheaper to pay the bit between £100 and  ÃƒÂ‚£500 than the bit between £100,000 and £500,000, don't you think? :)

Answer 2

It depends if you can afford to pay the £250 excess (if you added £100 to it) if you had an accident.

To be honest if you had damaged your car (assuming you didn't hit anyone else) I'm pretty sure for anything upto a few hundred pounds you wouldn't claim for anyway as it would cost you more than that in the long run due to loss of no claims. In which case I'd take the higher volentary excess.

By the way you only pay the excess for claims against your car, not if you hit somebody else and don't damage your car (or if you get your car fixed yourself and just go through the insurance for theirs).

You would also  need to consider that if someone else hits you (and it's their fault), you may have to pay the excess and claim it back off their insurance.