Auto insurance can be one of the most significant expenses for car owners in Australia. However, there are several strategies to reduce your premium costs, and one effective method is by increasing your excess. This article explores how adjusting your excess can lead to substantial savings on your auto insurance.
Understanding Excess in Auto Insurance
Excess refers to the amount you agree to pay out of pocket before your insurance coverage kicks in during a claim. There are two types of excess: mandatory excess, which is set by the insurer, and voluntary excess, which you can choose. Increasing your voluntary excess is a common way to lower your insurance premium.
How Increasing Your Excess Saves You Money
When you choose to raise your excess, your insurance provider sees you as a lower risk. This is because you are willing to take on more financial responsibility in the event of an accident. Generally, the higher your excess, the lower your premium will be. Here’s how this works:
- Lower Monthly Premiums: By increasing your excess, you can significantly reduce your monthly or annual premiums. These savings can add up over time, which means more money in your pocket for other expenses.
- Impact on Claim Amounts: With a higher excess, you are taking on more risk, which motivates you to drive more carefully and avoid accidents.
Assessing If Increasing Your Excess is Right for You
Before deciding to increase your excess, consider your financial situation and driving habits:
- Driving Frequency: If you frequently drive in high-traffic areas or have a history of accidents, a lower excess might be more suitable.
- Financial Buffer: Ensure you have enough savings to cover the increased excess amount in the event of a claim.
- Compare Premiums: Explore various insurance providers to determine how different excess amounts affect your premiums.
How to Increase Your Excess
If you've decided that increasing your excess is the right choice, here’s how to go about it:
- Review Your Policy: Examine your current insurance policy and look for the voluntary excess section. Most insurers will allow you to change it online.
- Contact Your Insurer: Reach out to your insurance provider to discuss any options available to increase your excess.
- Update Your Policy: Once you agree to the new excess amount, make sure to update your policy details and confirm the new premium rate.
Things to Keep in Mind
While increasing your excess can lead to savings, it’s essential to strike a balance. A few considerations include:
- Other Discount Options: Don’t overlook other ways to save, such as bundling insurance policies or maintaining a good driving record.
- Annual Review: Regularly review your policy and adjust your excess as necessary, especially if your circumstances change.
Conclusion
Increasing your excess is a practical way to save on auto insurance in Australia. By understanding how excess works and evaluating your personal circumstances, you can enjoy lower premiums while still being adequately covered. Remember, always perform your due diligence by comparing offers from various insurers, and choose an excess level that aligns with your risk tolerance and financial capacity.
