Car insurance brokers have issued warnings to consumers that cutting their motor car insurance cover back in an effort to save money could result in an exposure to financial risk in the event of a car theft or accident.
After conducting a research study that found that 57 per cent of its members have experienced instances of consumers reducing their level of insurance cover in an attempt to find cheaper car insurance, the British Insurance Brokers Association voiced their concerns to the general populace. Additionally the research found that last year’s figures were substantially less at 23 per cent.
BIBA’s chief executive Eric Galbraith stated that the rate in which people have been cutting their cover in an attempt to save money has become very worrisome. Mr Galbraith said that while BIBA understands that the current financial landscape may be bleak, he urged consumers to not do anything that could result in overexposure of risk. Calling the notion of reducing cover a “false economy,” the chief executive added that not having the proper car insurance cover could result in thousands of pounds to replace a stolen car or repair one damaged badly in an accident.
The most commonly found instances among consumers who reduced the level of their insurance in order to save cash included scrapping non-essential cover.
Mr Galbraith stated that if a consumer reduces their sums inaccurately the mistake could be costly, especially in the event of claim payments. Additionally he stated that should the unexpected happen, customers need to make sure they have the ability to afford higher excesses. The key, Mr Galbraith concluded, was thinking long and hard in regards to the cover a consumer requires to meet a certain financial consequence.
Instead of cutting cover, BIBA recommends customers saving by making an upfront premium payment since most insurers will charge interest on any monthly payments.