How Excess and Paying Upfront Affects Your Car Insurance Costs

Paying your car insurance premium in one instalment is a common way to cut the amount you spend on your policy over the year, likewise with increasing the amount you are prepared to pay towards a claim.

Households in Ireland have been hit by soaring costs as the recession has continued, with many drivers seeking to get the best possible motor insurance deals. As you do your research and find the best deal, you will see there are various payment options ranging from one upfront instalment to smaller monthly amounts. The Independent recently stepped forward to offer advice on the best way to cut the cost of your premiums and explained that one large payment could benefit the cash-strapped.

Initially it may seem better value to opt for a monthly system, which can fit in well with household budgets, as many regular outgoings are paid on this basis. However, it is a good idea to look at the interest rates on offer when finding the best insurance deal. Companies generally add interest to your monthly payments and over the course of a year this may bump up your policy beyond what you would pay if you made one transaction.

Figures from the Independent reveal that interest on direct debit payments may reach 24 per cent per month, but there are some firms where this figures stands lower at 19.66 per cent. Motorists, who find they have the necessary funds to pay their insurance in a lump sum, but they have already started on a direct debit scheme, are free to approach their insurer and ask whether they can swap payment methods.

Once you have found your affordable policy there are additional ways that you can reduce what you pay for your premium. Insurers offer an excess for the majority of claims submitted. This amount is what you agree to pay following an incident regarding your motor.

Repairs for cracked windscreens for example sometimes require the policyholder to partly fund the bill, depending on their insurance. If you choose to offer a higher excess this is often met with a drop in the cost of your premium. This is because in the event of a claim, insurers would not have to cover as much of the repair bill so they lower your premium to reflect this. In order to significantly reduce your premiums, the Independent suggests you offer an excess figure of €300.



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