Insurance costs get excessive

CONSUMERS are being urged to check their insurance policies after a sharp climb in excess payments in recent years.

Car insurance excesses, historically about $500, have risen above $800 with some insurers, while excesses payable on home insurance claims can be over $1000 — a lot of money to pay from your own pocket.

A lack of broad industry data about insurance excesses makes it tough for consumers to know what is normal, but insurance company sources have acknowledged the rise and noted that more people now had flexibility to change their excess.

Rising excesses partly reflect sharply higher repair costs, particularly for cars, as well as companies cracking down on fraudulent claims.

“Where we are seeing these quite substantial rises in excesses, it’s pricing people out of the market for claiming for those things that they probably need to claim and are more likely to happen,” said consumer finance specialist Lisa Montgomery.

“These things add up. If you do a windscreen and then do a mirror, you are looking at $1000 that you can’t claim,” she said. “People tend not to fix them because they have to pay for them.”

Canstar’s group executive financial services, Steve Mickenbecker, said almost all insurance policies had excesses, and most people accepted them because they kept premiums lower, but inflation was increasing small claims’ cost.

“It makes sense (for insurers) to gradually bump up the excess,” he said. “It gets the little claims out of their hair.”

Insurance company bosses have described some car repair bills as “exorbitant”, while separate Canstar research found that the cost of simply replacing an electronic car key was $250-$750, or $2000-$5000 if all keys were lost and the car’s computer needed resetting.