Reducing your car insurance cover could see you end up paying more

During the tough economical times for many people, motorists are looking at varying ways of saving money each month to ease their financial hardships.

A recent study revealed that 37 per cent of motorists have considered downgrading their car insurance policies to save some cash. However, this could bring about more problems than they think as taking to the roads without the correct insurance in place could leave people open to punishment and fines.

A common practice is to take out third party insurance to cut costs, but one insurance expert said there are risks in doing so.

He said, “If you only opt for third-party cover then not only will you have to pay for damage to your own car, but your premiums will go up as well after the accident. Increasing your excess is also a popular way of cutting your premiums. The savings are significant and can mean a difference of 10 per cent or more in the cost. However, this is far better for those who only use their cars once or two days a week, and not at peak times. It is a false economy for someone who races up and down the motorway every day. And if your car is only worth a small amount in the first place, it makes no sense to have an excess threshold that high.”

With so many motorists planning to decrease their levels of cover, the danger of them being caught without an accurate insurance policy is bigger.

There is also the risk of people being banned from driving or having their cars seized with them being sent to the crusher in extreme cases. Motorists, who rely on driving for work, are playing a risky game, which could see them end up in a far worse position than they started in.

The report also shows that 5 million people are looking into cutting back on other insurance too. As many as 30 per cent of homeowners are thinking about removing flood cover from their home insurance policy despite the risk of extreme weather continuing to rise.

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