Finding ways to save money can be difficult. Normally it involves finding slightly creative ways to reduce your spending whilst still trying to live a fun and interesting life (no one likes to save money and eating only Baked Beans).
Here is a way that I recently got some cash back by ringing my insurance company (who provide me with car insurance and home and contents insurance) – it took a mere 5 minutes but resulted in nearly $700 in cash back into my pocket.
A quick intro to what excess means
Excess is the term given to the amount you will need to pay in order to initiate a claim with your insurance company. For example you might be insured for $10,000 of home and contents, though you will need to pay an excess of between $100 – $1500 in order to make a claim.
You can increase your excess
Something many people don’t often realise is that by having an increased excess amount, e.g. paying more in the event of a claim, you can reduce your yearly premium substantially and in turn the amount you have to pay in a lump sum to your insurance company.
It means that in the event of a claim, you will have a higher initial figure to pay in order to claim. This can work in both a positive and negative way.
You can change your excess, mid policy if you want
If you are like me and 6 months into a 12 month policy (on home and contents insurance + car insurance) you can ring your insurance company and request to change your excess. You can reduce your excess and owe them more money or you can increase your excess in exchange for a refund towards part of your policy – it really depends on your personal appetite for risk.
I increased my excess & here’s why
I didn’t really consider my excess when initially signing up, instead just hunting the best deal possible for full insurance that covered my requirements. Now that I need to save some more money, I have opted to increase my excess in order to receive a small refund.
Although this means I will have to pay more should a claim arise, to date I have had zero claims since ever buying my first car or home insurance policy. This doesn’t mean I won’t require a claim into the future, though the upfront savings from a year or two of taking the risk are personally worth it for me. Especially if it means pocketing $700 a car for taking on the risk of having a $700 higher excess – the savings in the first year alone will cover it.
Not a bad way for me to take on a slightly higher risk in return for freeing up some extra cash. The extra money I intend to invest in ways that should make me more money – making money that was otherwise idle until a claim, start to work harder for my wealth creation desires.
Drop us a comment below with your thoughts. This saving money idea is definitely not for everyone, though curious on what people think about reducing insurance to save more money.